Costa & Premier Inn owner saw decent sales, profit, & dividend growth, but shares fell 8%
Companies: Whitbread PLC
The company that owns Premier Inn and Costa Coffee warned investors on Tuesday that it faces a "tougher consumer environment" in the year ahead.
In its full-year results, Whitbread Group reported strong sales and profit growth, as it raised its dividend 6%. However, it did little to reassure investors with shares sliding 8% soon after the market opened.
Whitbread says it had another year of strong growth, with total Group sales increasing 8.2% to £3.1bn and underlying EPS increasing 6%. Total basic earnings per share rose by 7.3%.
| Financial Highlights | 2016/17 | 2015/16 | Change | Change |
| 52 weeks | 53 weeks | 53 week | 52 week | |
| Total revenue (£m) | 3,106.00 | 2,921.80 | 6.30% | 8.20% |
| Underlying profit1 before tax (£m) | 565.2 | 546.3 | 3.50% | 6.20% |
| Underlying operating profit1 (£m) | 468 | 446.9 | 4.70% | 7.40% |
| Costa underlying operating profit1 (£m) | 158 | 153.5 | 2.90% | 5.30% |
| Profit for the year (£m) | 415.9 | 387.3 | 7.40% | |
| Underlying basic EPS1 (pence) | 246.48 | 238.65 | 3.30% | 6.00% |
| Total basic EPS (pence) | 231.39 | 215.66 | 7.30% | |
| Full year dividend (pence) | 95.8 | 90.35 | 6.00% |
Premier Inn enjoyed strong sales growth, benefitting from nearly 4,000 new rooms opened in the UK this year, with the firm achieving over 80% occupancy. Its direct bookings reached record levels at 94%, supporting its return on capital.
Its most famous brand Costa Coffee opened 255 new stores across the globe, rolling out more Costa Travel stores, too. Costa Express installed more than 1,500 machines, most of which were in the UK.
Over the period, Whitbread added to its senior team and made progress with its £150m cost efficiency programme, cutting costs in procurement, supplier consolidation, and labour scheduling, all of which helped maintain margins.
CEO Alison Brittain said Whitbread had made significant progress towards its three priorities: 1) to grow its core UK businesses, 2) to focus on strengths and expand internationally, and 3) to build the capability and infrastructure to support long-term growth.
"In the year ahead we will continue to focus on organic growth and investing in our customer proposition. This, together with our efficiency programme and disciplined capital management gives us confidence in delivering another year of good progress, in line with overall expectations.
Whilst we are only seven weeks into our new financial year Premier Inn has had a good start to the year and Costa has also seen positive like for like sales growth, although we remain cautious and expect a tougher consumer environment than last year.
In the longer term we remain confident that, with our significant structural growth opportunities, the power of our brands and the investments we are making, we will continue to deliver strong returns and sustainable long-term growth for our shareholders".
