25th Apr 2023 11:49
(Alliance News) - Whitbread PLC delivered a strong set of annual results on Tuesday, with the hotelier benefiting from a post-pandemic recovery in demand.
In London near midday, Whitbread was the top blue-chip rise, up 5.6% to 3,302.45 pence. Over the past 12-months, the stock is up 18%.
The Premier Inn-owner posted a pretax profit of GBP374.9 million in the financial year that ended March 2, multiplied from GBP58.2 million the year before.
Whitbread said its annual profit was above pre-pandemic levels, driven primarily by its Premier Inn UK division, which saw total sales growth of 22%.
Neil Shah, director at Edison Group, dubbed Premier Inn was in a "suite spot" for attracting budget-conscious travellers, adding that they should "further fuel" the company's already "robust" demand.
Revenue surged 54% to GBP2.63 billion from GBP1.70 billion.
Victoria Scholar, head of investment at interactive investor, said: "The return to economic normality post-pandemic with the removal of travel restrictions and the release of pent-up demand boosted demand for hotel rooms at Whitbread and provided a tailwind to its bottom line. The cost-of-living crisis and the squeeze on household budgets have also driven more customers towards its budget low price point offering."
On the back of the strong annual results, Whitbread declared a final dividend of 49.8p per share, up 44% from 34.7p a year earlier. This brings the full-year dividend to 74.2p.
Its final dividend in the prior financial year was its sole payout, reinstated after the Covid-19 pandemic.
Whitbread also on Tuesday announced a share buyback programme of up to GBP300 million. The purpose of the buyback is to reduce the capital of Whitbread by returning surplus capital to shareholder, the company explained.
The firm said that the share buyback, which will be complete in the first half of financial year 2024, reflects its confidence in its outlook.
For Derren Nathan, head of equity research at Hargreaves Lansdown, the increase in pay outs to shareholders from Whitbread shows that the company has got off to a "strong start" in the current year and provides confidence for the firm's future prospects.
Greg Johnson, research analyst at Shore Capital, agreed: "Momentum into financial 2024 continues to build, and we are increasingly confident that the group can grow profitability in the UK this year, which could lead to meaningful upgrades."
Johnson said that, of the higher financial 2023 profit base, Shore Capital now expects to see financial 2024 pretax profit of GBP410 million, with lower losses in Germany offset by non-repeat of the pension credit, when assuming UK profitability was flat.
HL's Derren Nathan noted, however, that while Whitbread's opportunity in Germany is much larger than that of the UK, it is not without risk.
"Whitbread isn’t expecting to breakeven there in the current year. There’s work to do on branding in Germany, but it's bedding down in the country and given the strong track record we wouldn’t bet against Whitbread making a success of its expansion," he said.
By Heather Rydings, Alliance News senior economics reporter
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