Earnings and debt up significantly at Whitbread

Hospitality group Whitbread reported sizeable increases in revenue and earnings in its preliminary results on Tuesday, with total revenue up 12% to £2.91bn, and underlying profit before tax up 11.9% to £546.3m.

On a like-for-like basis, group sales grew 3.0% in the 53-week year to 3 March at the FTSE 100 firm.

Its Premier Inn brand saw total sales growth of 12.9% and like-for-like growth of 4.2%, while coffee chain Costa saw total sales improve 15.9% and UK like-for-likes grow 2.9%.

Whitbread’s total profit for the year was up 5.8% at £387.3m, compared with £366.1m a year earlier. Underlying basic earnings per share were 238.65p, up 11.7%, while total basic earnings per share increased 5.3% to 215.66p.

The group’s return on capital was down slightly at 15.3%, compared with 15.7% in the prior year, which included investments in future hotel openings.

“With another good set of results, that continue to show the strength of Whitbread's brands, the board is pleased to announce an increase in the full year dividend of 10%,” said chairman Richard Baker.

“This is a very exciting time for the company; with our recent senior appointments, we now have a refreshed leadership team, and I am delighted it is being led by Alison Brittain as CEO to take us on the journey to building a bigger as well as a better Whitbread."

Whitbread generated £782.2m cash from operations during the year, funding capital investment of £724.9m. Its net debt at year-end was significantly larger than last year, at £909.8m compared with £583.2m.

CEO Alison Brittain said the board was proposing a final dividend of 61.85p per share, delivering the full 10% dividend increase.

“Both Premier Inn and Costa benefit from attractive market growth opportunities and we will continue to capitalise on these by developing our network and brand strength as we fulfil our ambitions to reach 85,000 UK hotel rooms and c.£2.5 billion system sales in Costa, by 2020,” she said.

“The world around us is shifting, with rising customer expectations, an evolving competitor landscape, rapid technological developments and changing cost structures.

“In responding to this change, I am especially keen to reinforce our relentless focus on our customers and on innovation to develop our brand propositions ensuring we stay ahead and become more productive,” Brittain explained.

She identified three “key strategic themes” to develop the business - grow and innovate in the core UK businesses, focus on strengths to grow internationally, and build the capability and infrastructure to support long-term growth.

Brittain said the strategy will enable Whitbread to deliver significant growth ambitions, grow earnings and dividends, maintain good returns on capital and create further value for shareholders.

“Whilst it is only six weeks into our new financial year we remain confident of making good progress this year."