23rd Oct 2018 08:13
LONDON (Alliance News) - Premier Inn-owner Whitbread PLC hiked its interim dividend Tuesday after profit and revenue from its ongoing business rose modestly despite softer customer demand, as it continues to progress its Costa Coffee sale and focus on its hotel business.
For the six months ended August, pretax profit from continuing operations rose 0.2% to GBP257.4 million from GBP256.8 million the year prior. This was after revenue rose 2.6% to GBP1.08 billion from GBP1.05 billion the year before.
"The highlight of the first half was the announcement of our agreement for the sale of Costa to The Coca-Cola Co for GBP3.9 billion, which received the overwhelming approval of our shareholders in October," Whitbread Chief Executive Officer Alison Brittain said.
In August, Whitbread sold the Costa Coffee chain of coffee shops to US soft drinks maker Coca-Cola. The deal is still seeking regulatory approval and Whitbread intends to distribute a "significant" amount of the proceeds to shareholders.
During the period Costa - now deemed a discontinued operation - saw pretax profit rise 0.7% to GBP59.6 million from GBP59.2 million a year prior. This was after revenue grew 3.7% to GBP645.0 million from GBP621.7 million a year before.
"Much work still remains to be done to ensure a smooth and successful separation from Whitbread at completion and during the following transitional service period, which we are confident in our ability to execute efficiently," Brittain added.
Whotbread proposed a 32.65 pence per share interim dividend, up 4.0% from 31.40p the year prior.
"Following the sale of Costa, Whitbread will be a focused hotel business with operations in the UK, Germany and the Middle East," Brittain continued. "In the first half of the year, Premier Inn delivered total UK accommodation sales growth of 4.8%. Although we have seen some weakness in consumer demand over the summer, we have made further encouraging progress with our efficiency programme, ensuring we remain on track with our plans for the current year."
During the period, Whitbread's network of UK hotel rooms expanded to 74,000. The firm has a further 13,000 rooms planned in its pipeline and has the "potential to further extend our growth runway in the UK to 100,000 rooms and beyond."
"Alongside this material addition of new capacity, we have maintained our leading occupancy rate increased the rate of customers booking with us directly and delivered a strong return on capital", Brittain said.
Occupancy in the UK stood at 80.1%, down from 81.8% the year prior. The average room rate, however, rose 1.2% to GBP66.16 from GBP65.40 the year prior. Consequently, the revenue per available room dipped a more modest 0.9% to GBP52.97 from GBP53.46 the year before.
In Germany, Whitbread's hotel room pipeline is nearly 6,000 rooms. This is, the firm explained, equivalent to 30% of its total Premier Inn room pipeline.
Return on capital from continuing operations at Whitbread dropped 50 basis points to 14.9% from 15.4%.
"We are now looking forward to dedicating our focus to the significant structural growth opportunities available to Premier Inn in the UK and internationally," Brittain added.
In February, Brittain promised Whitbread would provide "further detail" on how it will "enhance" its investment in its continuing business including its "property strategy to support our growth plans."
Shares in Whitbread were 1.9% lower at 4,378.00 pence early Tuesday.
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