Whitbread (WTB) announced plans to roll out its Premier Inn budget hotel chain in Germany, alongside expectation-beating half-year results . The blue-chip hospitality group posted a 19 per cent increase in underlying pre-tax profit to £256m.
The group may be in expansionary mode, but its Premier Inn and Costa brands still recorded impressive organic growth: like-for-like sales were up 10 and 6 per cent, respectively. Net debt also rose 19 per cent from the year-end to £467m, but finance costs look easily manageable. Whitbread’s cash generation was so strong that the group felt able to reward shareholders with another double-digit increase in the dividend.
The move into Germany looks promising. Europe's economic powerhouse isn't well served by branded budget accommodation, and the recent downturn is likely to make the country's business travellers all the more cost-conscious. Whitbread has already acquired the freehold on a 200-room hotel in Frankfurt, and has plans to open another half-dozen hotels over the next five years.
But the group is still confident of growth in its core UK market, with plans to double the number of its London hotel rooms to 18,000 by 2018. This year it should invest around £500m globally, which translates into roughly 4,500 new Premier Inn UK rooms and 230 Costa outlets.
Deutsche Bank expects 2015 EPS of 201p, rising to 233p in the following year.
| WHITBREAD (WTB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 4,138p | MARKET VALUE: | £7.5bn | |
| TOUCH: | 4,136-4,139p | 12-MONTH HIGH: | 4,498p | LOW: 3,250p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 1,033p | NET DEBT: | 25% | |
| Half-year to 28 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.1 | 201 | 99 | 21.8 |
| 2014 | 1.3 | 242 | 105 | 25.2 |
| % change | +13 | +20 | +6 | +16 |
Ex-div: 4 Dec Payment: 9 Jan | ||||
