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Tue 24th Oct 2017 - Whitbread reports turnover and profit boost
Whitbread reports turnover and profit boost: Whitbread has reported sales rose 7.4% to £1,671bn in the six months to 31 August with underlying profit before tax up 6.7% to £328m. Over 2,000 new Premier Inn rooms were opened in the UK in the first half and new Costa breakfast and lunch ranges were successfully launched throughout the UK. It reported return on capital increased 30 bps to 15.4%, despite scale of recent investment. Chief executive Alison Brittain said: “I am pleased with the progress we have made in executing the plan we set out in November last year, with earnings per share up 7.4% in the half and return on capital of 15.4%. Our plan is based on growing in our core UK markets; focusing on structural growth opportunities for Premier Inn in Germany, Costa in China and Costa Express; and strengthening our capabilities and efficiency to deliver these attractive opportunities. In our core UK markets, we have opened over 2,000 Premier Inn rooms in the last six months; developed digital capabilities central to our operating model in Premier Inn, which has enabled new tools such as our automated trading engine and business booker; increased the proportion of hotel customers booking with us directly to 95%; strengthened new Costa store pipeline, focused on growth channels; and developed product innovation capability in Costa which has already launched new breakfast and lunch ranges, combined with new coffees and cold drinks. We have also made significant progress in simplifying our international business and creating platforms for sustainable growth over the longer term. This progress includes: completion of the exit of non-core international operations, including hotels in India, Thailand, Singapore and Indonesia and our equity owned Costa business in France; the buy-out of our joint venture partner for Costa in South China giving us full strategic and funding flexibility to unlock Costa’s potential in China; and accelerating the expansion of Premier Inn in Germany, with nine hotels now in our committed pipeline in addition to our existing hotel, resulting in an open and secured pipeline of over 2,000 rooms. This amount of change and growth requires us to manage and execute in a more efficient and technology enabled manner. Whitbread’s investment in improving shared capabilities are critical to enable both Premier Inn and Costa to deliver their plans in the UK and internationally. Work to improve our capabilities over the last two years has included: building a strong management team, completed with the new group transformation director; creating a shared digital and technology infrastructure; delivering over £60 million of efficiency savings over the last two years as part of our £150 million target with growing confidence on the long-term potential; and enhancing our property capability and strategy. We have significant structural growth opportunities, in the UK and internationally, and confidence in our plans to capitalise on these opportunities. Despite the well known short-term economic uncertainty, our performance in the first half was good and we expect to meet expectations for the full year. Although we remain cautious on the current environment, we are confident that ongoing disciplined allocation of capital and focus on executing our plans will deliver long-term growth in earnings and dividends and a strong return on capital.” Richard Baker, Whitbread chairman, added: “In the year that Whitbread celebrates its 275th birthday, I am pleased to see another good performance as we continue to invest in the compelling long-term opportunities available to our businesses. We have maintained a strong balance sheet and continue to generate excellent cash flow, which together provides the board with confidence to increase the interim dividend to 31.4p.” 


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