Whitbread has reported sparkling results for the six months to 28 August 2014, with underlying profit up 18.5% before tax, and strong momentum, but demanding comparatives looming in the fourth quarter due to the benign weather last year.
Andy Harrison, Chief Executive, commented:
“This is a very good set of first half results with total sales growing by 13.0%, driving an 18.5% increase in underlying pre-tax profits. This profit growth converted into strong cash generation with EBITDA up 17.1%, boosted by a 1.4% pts increase in our return on capital to 15.8%. Our cash flow is funding our double digit dividend growth and rapid organic expansion which will drive our future profit growth.
“Our two market leading brands, Premier Inn and Costa, go from strength to strength and continue to win market share.
“Premier Inn delivered total sales growth of 14.7% with like for like sales growth of 9.6% and record UK occupancy at 84.0%.
“Costa delivered total sales growth of 16.9% with like for like sales growth of 6.1% in our UK stores, driven by a 5.0% increase in customer transactions.
“Our Restaurants business grew its total sales by 4.3%, performing ahead of its industry benchmark.
“The trading momentum of our strong first half performance has continued into the first few weeks of the second half and positions Whitbread well to deliver full year results in line with expectations. The comparatives become more demanding, especially in the fourth quarter, due to the benign winter weather last year which caused minimal trading disruption.”
“This financial year we expect to invest around £500 million in driving our organic growth and further improving the quality and consistency of our customer experience. We expect to open around 4,500 new Premier Inn UK rooms and around 230 net new Costa stores worldwide. This keeps us on track to achieve our ambitious growth milestones.”
Financial Highlights
- Total revenue up 13.0% to £1,293.2 million (2013/14: £1,144.7 million)
- Group like for like sales up 7.0%
- Underlying profit before tax up 18.5% to £256.0 million (2013/14: £216.1 million)
- Underlying basic EPS up 21.5% to 111.69p (2013/14: 91.94p)
- Interim dividend up 15.6% to 25.20p (2013/14: 21.80p)
- Hotels and Restaurants underlying profit up 15.0% to £225.0 million (2013/14: £195.7 million)
- Costa underlying profit up 20.5% to £52.4 million (2013/14: £43.5 million)
- Premier Inn total sales up 14.7%, like for like sales up 9.6% and total revpar up 8.8%
- Costa total sales up 16.9%, worldwide system sales up 15.5% and like for like sales up 6.1%
- Group return on capital increased to 15.8% (2013/14: 14.4%)
- Strong cash flow with EBITDA up 17.1% to £343.1 million (2013/14: £293.0 million)
- Strong balance sheet: net debt £467.2 million (£391.6 million at 27th February 2014)
Statutory Highlights
- Profit after tax and exceptional items up 7.2% to £188.6 million (2013/14: £175.9 million). Last year’s profit benefited from an exceptional deferred tax credit of £25.1 million following the decrease in the corporation tax rate
- Total basic EPS 105.43p up 6.1% (2013/14: 99.33p)
Investing for future profit growth
- On track for 2016 and 2018 growth milestones
- Expected capital expenditure of around £500 million this year, growing hotel pipeline and Costa estate and further improving our customer experience
- Building Premier Inn and Costa international profit growth platforms
- 1,300 new UK jobs created by Whitbread brands, with a further 10,000 expected over the next three years
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