16th Oct 2024 09:09
(Alliance News) - Whitbread PLC on Wednesday said its interim profit has dropped more than 20% amid soft UK demand, but remains optimistic for the future as it begins to implement a five-year growth plan.
The Bedfordshire-based hotel and restaurant owner said pretax profit for the six months ended August 29 was GBP309 million, falling 22% from GBP395 million the year before. Revenue remained flat from last year at GBP1.57 billion.
Operating costs increased 5.3% to GBP1.19 billion from GBP1.13 billion.
It said the decline in profit reflected "a slightly softer UK demand environment", as well as its investment into an accelerating growth plan and lower interest receivable.
Whitbread's five-year plan demonstrates its confidence for the coming years, as it aims to grow 2025 adjusted pretax profit by at least GBP300 million by financial 2030, and generate more than GBP2.0 billion for dividends, share buybacks and high-return investments.
Whitbread declared an interim dividend of 36.4p per share, up 6.7% from 34.1p last year.
The company expects to make between GBP175 million and GBP225 million from property disposals in the second half of financial 2025, having accepted offers on 51 branded restaurants during the first half for GBP56 million. Estate growth in the first half meant total accommodation sales were flat year-on-year, whilst total UK food & beverage revenue fell 7% as it made changes to its food & beverage offer in its growth plan.
It stated that it made no changes to its full-year guidance for 2025, other than increasing its prediction for cost efficiencies to GBP60 million from between GBP40 million and GBP50 million.
Whitbread did not on Wednesday provide a profit forecast, but detailed in its financial 2024 results announcement that every 1% change in like-for-like accommodation sales from 2024 would have a GBP16 million to GBP17 million impact on pretax profit. Every 1% change in food & beverage sales was estimated to have a GBP2.5 million impact on pretax profit.
Broker Shore Capital forecasts adjusted pretax profit of GBP524.5 million for the 2025 financial year due to end February 29, which would represent a 6.5% fall from GBP561 million last year.
The company also announced on Wednesday its launch of a further GBP100 million share buyback, which will be completed by May 1. This was to reduce capital and enhance the company's earnings per share.
Chief Executive Officer Dominic Paul said: "In the UK, we have a clear pathway to further extend our market-leading position and capitalise on the favourable UK supply backdrop. We are determined to build on our significant outperformance since the pandemic and whilst the market has been slightly softer than last year, we remain on course to grow our UK returns substantially over the medium-term, whilst continuing to deliver for our customers, as evidenced by our high guest scores.
"In Germany, we are really encouraged by our progress to date. Our trading performance and the progressive maturity of our estate mean we are set to reach breakeven on a run-rate basis later this year. Our longer-term plans to become the country's number one hotel brand are also on track, as we move towards replicating our success in the UK market, delivering double-digit returns on our current open portfolio by financial 2030.
"Having laid the foundations for future growth, we are executing at pace and remain confident in the outlook as reflected by our increased dividend and further share buyback."
Shares in Whitbread were up 4.4% at 3,207.35 pence each in London on Wednesday morning.
By Emily Parsons, Alliance News reporter
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