22nd Oct 2013 08:09
LONDON (Alliance News) - Whitbread PLC Tuesday reported double-digit growth in sales and dividends in the first half of the year, as its profits were driven by its two growth engines, Premier Inn hotels and Costa Coffee.
Chief Executive Andy Harrison told journalists on a conference call that it is too early to say whether the group will see improved trading outside of London. However, he said Whitbread is on plan to meet expectations for the full year. Harrison said that the company's first half results are a good guide to how the group expects trading to be in the second half of the year.
The board declared an interim dividend of 21.8 pence per share, an increase of 12%.
The multinational hotel, coffee shop and restaurant company, which owns brands Brewers Fayre pubs, Premier Inn hotels and the Costa Coffee chain, said that revenues rose 12% in the first half to GBP1.14 billion from GBP1.02 billion a year earlier.
It said that group like-for-like sales were up 2.8% in the period.
Whitbread reported a pretax profit of GBP200.7 million for the six months to August 29, compared with GBP185.2 million in the prior year, driven by strong like-for-like sales growth and organic network expansion across its Premier Inn and Costa Coffee brands.
Net profit came in at GBP175.9 million, after incurring higher tax expenses than the year before.
Whitbread said that its Premier Inn hotels in London drove sales and profits for the hotel chain in the first half of the year.
It said that the total number of rooms available rose by 8.4%, and like for like sales were up 3.3%, as it opened 1,368 net UK rooms, and opened 12 new hotels during the first half. Total revenue per available room grew by 2.7%, with an increase in occupancy to 80.3%.
It said that overall its hotels and restaurants businesses had a good first half performance, with revenue increasing by 8.7% to GBP767.3 million.
The group said that its restaurant business grew total sales by 2.9% to GBP269.9 million, with flat like for like sales and one net new opening. Harrison said the restaurant business continues to see growth, despite a challenging environment.
The group said that overall profits and sales also were driven by a strong store-opening programme by its Costa Coffee chain. It reported a 21% increase in Costa Coffee revenues to GBP378.8 million, from GBP313.4 million a year earlier, and underlying profit of GBP43.5 million, up 21%.
The group said that it opened 153 net new Costa Coffee stores worldwide, and grew total system sales by 20% to GBP569.2 million. It said UK system sales also grew by 20%, with strong consumer demand driving a 5.5% growth in UK like for like sales.
Some analysts say that, in an increasingly competitive UK coffee market, the fast-growing Costa Coffee chain is approaching saturation in the UK. But Harrison said that he believes there is still substantial growth for the brand in the UK.
The group said that it now has over 3,000 Costa Express machines operating across the UK.
In terms of investment, Harrison said that the group's biggest spending will be on its Premier Inn hotels. He said that its rollout and business plans for its Premier Inn hotels in the UK are on track, with a secured pipeline of more than 10,500 new rooms and the milestone of 65,000 total rooms in the UK expected to be reached by 2016.
Outside of the UK, the Whitbread chief said China is still an exciting opportunity for the Costa Coffee chain, having opened 300 stores in the country so far.
Harrison said that, while China is a big focus in its plans to extend Costa's footprint overseas, territories within Europe, including France, also are quite appealing.
"We opened a new store in Paris last week, and will be opening six trial stores in Paris to see how the brand works. We are looking at a number of other territories, but we want to see how the brand does in one new territory first, before we move out elsewhere," Harrison told journalists.
Whitbread shares were up 1.0% Tuesday morning, trading at 3,405.00 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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