(Reuters) - British pub operator Mitchells & Butlers <MAB.L> posted a smaller full-year profit due to higher costs and said it would not pay an interim dividend in 2018, sending its shares down more than 12 percent in morning trade.
The company, which runs the Nicholson's and All Bar One pub chains, said adjusted operating profit fell 3.1 percent in the year ended Sept. 30.
However, like-for-like sales grew 1.8 percent in the period, compared with a 0.8 percent drop the previous year.
Like other operators in the sector, Mitchells & Butlers has been battling increased costs, most notably from wage inflation, property costs and exchange rate movements.
Earlier this month, rival pub group JD Witherspoon <JDW.L> warned about the impact of higher input costs, as the sterling took a hit after the Brexit vote in 2016.
The move to cancel dividend raised concerns about the company's cash-flow and growth prospects, Liberum analysts said.
However, Morgan Stanley analysts said the decision to pay the final dividend suggested that there were no immediate issues, and that the company was concerned about the long-term outlook.
Shares of the company were trading at 232 pence at 0903 GMT on the London Stock Exchange, on course for their worst session since late-June 2016.
(Reporting by Hanna Paul in Bengaluru; Editing by Sunil Nair and Amrutha Gayathri)