25th Apr 2018 07:43
LONDON (Alliance News) - FTSE 100-listed leisure firm Whitbread PLC on Wednesday said it is now "committed" to a demerger of Costa Coffee, as it reported a rise in group profit for its recently-ended financial year.
Within divisions, hotel chain Premier Inn saw profit rise, but Costa saw a decline.
Whitbread said it believes it is in the "best long-term interests" of the company's shareholdesr to separate Premier Inn and Costa, via a demerger of Costa.
"The demerger of Costa will be pursued as fast as practical and appropriate to optimise value for shareholders," Whitbread said in a statement. The company added it plans to complete this within 24 months.
"Whitbread will remain the owner and operator of the UK's most successful hotel business. A key priority will be continuing the development of Premier Inn by creating a business of scale in Germany to replicate the success we've had in the UK," said Whitbread Chief Executive Alison Brittain.
The restructuring update came as the firm released its full-year results for the twelve months to March 1.
In the period, revenue rose to GBP3.30 billion, from GBP3.11 billion the year before, as pretax profit climbed to GBP548.4 million from GBP515.4 million.
The company declared a final dividend of 69.75 pence per share, up on last year's 65.9p. This brings the total payout for the year to 101p from 96p, up 5.6%.
At Costa, UK like-for-like sales grew 1.2%, though UK equity stores like-for-like sales fell 0.4% compared to a 2.0% rise the year before. Premier Inn UK like-for-like accommodation sales rose 2.2% in the period.
Costa's revenue came in at GBP1.28 billion for the year, up from GBP1.20 billion last year, while Premier Inn recorded income of GBP2.00 billion from GBP1.91 billion.
Costa reported a pretax profit of GBP122.6 million, down compared to a profit of GBP129.7 million last year, while Premier Inn's profit came in at GBP497.5 million compared to GBP457.3 million the year before.
Looking ahead, Whitbread said Premier Inn is expected to open 4,000 to 4,500 rooms in the UK and Germany in the year ahead, including at least three hotels in Germany. Costa plans to deliver 230 to 250 net new stores globally, including the closure of around 60 to 80 stores in the UK and China.
In order to achieve Costa's "growth ambitions" in China and Express, approximately GBP5 million of incremental operating expense is planned in each business.
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