30th Apr 2019 09:12
LONDON (Alliance News) - Whitbread PLC on Tuesday reported a significant drop in annual profit, while it is on track to return its Costa Coffee sale proceeds.
Whitbread sold off Costa last summer for an enterprise value of GBP3.90 billion, leaving it with the Premier Inn hotel chain as well as the Brewers Fayre and Beefeater restaurants.
It plans to return GBP2.5 billion of this to shareholders, having already started GBP500 million of buybacks, and it will launch another tender in June.
Whitbread's pretax profit for the 12 months ended February 28 was GBP260 million, down 39% year-on-year, though the figure climbed 1.2% underlying to GBP438 million.
The 39% fall was driven by GBP178 million of extra costs, including GBP108 million related to the sale of Costa.
Whitbread's revenue rose 2.1% on the year prior to GBP2.05 billion. Consensus had been for revenue of GBP2.08 billion.
The company is paying a final dividend of 67 pence per share, making its total 99.65p from 101.15p the prior year.
UK accommodation sales growth was 3.5% due to extra capacity, while on a like-for-like basis it fell 0.6% due to softer demand, especially in the FTSE 100 firm's fourth quarter.
Whitbread has over 76,000 rooms in the UK, and plans to increase this to 110,000 rooms.
"The last year has been significant for Whitbread, with the sale of Costa to The Coca-Cola Co for GBP3.9 billion completing in January 2019," said Chief Executive Alison Brittain.
"We intend to return up to GBP2.5 billion of the net cash proceeds to shareholders, and we have repositioned Whitbread as a focused hotel business by delivering our three strategic priorities to grow and innovate in the UK; focus on our strengths to grow internationally; and to enhance the capabilities required to support long-term growth."
Brittain said the softness experienced in the fourth quarter has continued into March and April, but cautioned it is too early to say how this will go moving forward.
"However, it's important to note our strong balance sheet, ongoing efficiency programme and integrated operating model means we are likely to be more resilient in a weaker market than many of our competitors," she said.
"In addition, our ability and willingness to continue to invest through this period will place us in an advantaged position in the future."
For its year ending February 2020, Whitbread sees "weak" UK revenue per available room. It said cost savings will be around GBP40 million to GBP50 million, though this is lower than originally planned. It expects a GBP12 million loss in Germany.
Shares were 3.0% lower Tuesday morning at 4,610.00 pence each.
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