22nd Oct 2019 08:18
(Alliance News) - Hotel and restaurant chain owner Whitbread PLC held its dividend Tuesday after profit fell on rising one-off costs and as its key hotel unit continued to suffer amid challenging market conditions.
For the six months ended August 29, pretax profit narrowed 7.1% to GBP219.9 million from GBP236.8 million the year prior. This was despite revenue rising marginally to GBP1.08 billion.
Profit performance was hurt by operating costs rising 7.3% to GBP825.5 million from GBP769.3 million the year before.
This was primarily due to a jump in one-off costs to GBP37.7 million from GBP8.8 million a year prior, primarily representing charges related to the GBP3.9 billion sale of its Costa coffee chain to US soft drinks maker Coca-Cola Co which completed in January.
As part of the sale, Whitbread intends to return GBP2.5 billion to shareholders through share buybacks and as tender offer.
"We have delivered a resilient first half profit performance despite challenging market conditions in the UK," Chief Executive Officer Alison Brittain said. "Shorter-term trading conditions in the UK regional market have been difficult, particularly in the business segment where we have a higher proportion of our revenue, whilst trading in London remained strong."
Whitbread proposed a 32.7 pence per share interim dividend, unchanged on the year prior.
"We are enhancing and optimising our UK hotel network and have successfully trialled new higher specification 'Premier Plus' rooms in two hotels, with fantastic customer feedback," Brittain added. "We are on track to have 500 Premier Plus rooms this year, with ambitions for a total of 2,000 over the next year. We have also made good progress in delivering our ambitious efficiency targets, helping to offset part of the ongoing industry-wide inflation."
During the period, occupancy at its Premier Inn hotel chain fell to 78.3% from 80.1% and the average room rate slipped 3.2% to GBP64.07 from GBP66.16 a year prior. Consequently, revenue per available room fell 5.2% to GBP50.19 from GBP52.97 a year before.
Within Whitbread's much smaller restaurants business, sales grew 0.6% on a reported basis and fell 1.2% on a like-for-like basis on the year prior.
"Whilst the near-term market conditions in the UK remain uncertain, we have confidence in the long-term structural opportunities available in the domestic budget travel markets in the UK and Germany," Brittain said. "Following successful completion of our return of surplus capital programme, we still have a strong balance sheet, providing support for ongoing disciplined deployment of capital, which will deliver growth over the longer term."
Shares in Whitbread were 0.8% higher at 4,238.00 pence in London early Tuesday.
By Ahren Lester; [email protected]
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