Whitbread's outgoing chief executive, Alan Parker, is bidding adieu to the company and shareholders with a storming set of half-year results. The group has traded strongly through the recession thanks to its value-for-money ethos and it seems it is emerging into the recovery in great shape. "There is opportunity for Whitbread in this age of austerity," says Mr Parker. "Value for money is what people want."
The combination of a 7.8 per cent increase in like-for-like sales, ambitious physical expansion and cost savings combined to boost underlying pre-tax profit by 28 per cent to £151m. The group's market-leading budget hotel business, Premier Inn, increased occupancy in the first half to within a whisker of its 80 per cent target. Revenue per available room (RevPAR) substantially outperformed the budget hotel market, rising by 9.4 per cent, and is now above previous peak levels. Overall, revenue jumped 14 per cent to £356m. The group is seeking to capitalise on this success by increasing room numbers from an estimated 43,000 at the end of the current financial year to 55,000 by 2014. It has a pipeline of 11,000 rooms and expects to build 3,500 rooms next year, which is about 1,000 more than most analysts had expected.
Whitbread's restaurants also performed strongly, with revenue rising 4.5 per cent to £247m and like-for-like growth an appetising 4.2 per cent. Many of Whitbread's restaurants are attached to its hotels and therefore benefit from increased occupancy. The combined operating profit from hotels and restaurants was 21 per cent ahead at £154m.
However, it was the Costa Coffee chain that was the jewel in Whitbread's first-half crown. It managed an 8.5 per cent increase in like-for-like sales and, with the help of 116 net store openings and the acquisition of rival Coffeeheaven, revenues rose over 27 per cent to £199m and adjusted operating profits jumped 55 per cent to £19.6m.
Cost savings also contributed to the strong result, with Whitbread on target to deliver its £25m central cost reduction plan by the year-end. Bank of America Merril Lynch forecasts full-year underlying pre-tax profits of £284m and EPS of 113p (from £239m and 97p in 2010), rising to £323m and 129p, respectively, in 2011-12.
| Whitbread (WTB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,724p | MARKET VALUE: | £3bn | |
| TOUCH: | 1,723-1,725p | 12-MONTH HIGH: | 1,729p | LOW: 1,215p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 636p | NET DEBT: | 42% | |
| Half-year to 27 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 703 | 106 | 42.3 | 9.65 |
| 2010 | 805 | 151 | 66.3 | 11.25 |
| % change | +15 | +43 | +57 | +17 |
Ex-div: 27 Oct Payment: 11 Jan | ||||
