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(Alliance News) - Whitbread PLC on Wednesday said profit rose in the first half of its financial year, in line with rising revenue, while it also launched a new share buyback programme for up to GBP300 million.
The Dunstable, Bedfordshire-based owner of the Premier Inn chain of hotels said pretax profit rose 29% to GBP395.1 million in the six months that ended August 31 from GBP307.4 million a year earlier, as revenue rose 17% to GBP1.57 billion from GBP1.35 billion.
"This is an impressive first half performance. In the UK, we maintained high levels of occupancy whilst continuing to attract excellent guest scores and offering great value for our customers. The strengths of our operating model and our continued focus on driving cost efficiencies across the business resulted in UK margins exceeding pre-pandemic levels," said Chief Executive Officer Dominic Paul.
"In Germany, we are making good progress and are continuing to refine our strategy based on our learnings to-date and whilst there is much work to do as we continue to grow, we remain on course to achieve our long-term ambition of 10% to 14% return on capital."
Whitbread raised its dividend payment to shareholders by 40% to 34.1p from 24.4p a year earlier.
Whitbread also launched a new share buyback programme of up to GBP300 million to reduce its capital by returning surplus capital to shareholders. The new programme equals the GBP300 million buyback that was completed earlier this month.
Whitbread said it expects the implementation of the programme will enhance earnings per share. Basic earnings per share for the first half rose 28% to 147.6 pence from 115.7p a year earlier.
The share buyback programme, run by Morgan Stanley and JP Morgan, will begin with an initial GBP150 million tranche to end on January 23, followed by a further GBP150 million tranche ending no more than three months later, Whitbread said.
The maximum number of shares that can be repurchased under the programme is 14.1 million shares, Whitbread said.
Whitbread shares were up 3.6% to 3,441.00p each in London on Wednesday morning.
Turning to current trading, Whitbread said positive drivers seen during the first half have continued into its third quarter, with sustained strong levels of demand across both leisure and business and in London and the Regions.
For Premier Inn UK, total accommodation sales in the six weeks to Thursday last week were up 13% compared to the equivalent period a year earlier. For Premier Inn Germany, total accommodation sales were up 44% from a year earlier.
Looking ahead, Whitbread said it remains optimistic, pointing to its forward booked position from strong leisure and business demand, while also noting favourable supply dynamics as being set to continue for some time with the continued decline of independent hotels and constrained UK room supply growth.
"We are generating significant operating cash flow that we are redeploying into future profit growth as well as returning value to shareholders through increased dividends and share buy-backs. Given the structural shift in hotel supply and by continuing to invest in our assets, our brand and our teams, we remain confident that we can both extend our market leading position in the UK and replicate that success in Germany," said CEO Paul.
"The group is in excellent shape, trading well and has significant growth potential, both in the UK and Germany. Based on our strong performance to-date and an encouraging forward booked position, we remain optimistic about the full year outlook and look forward with confidence as reflected by our increased interim dividend and further planned share buy-back."
Whitbread said its guidance for its financial 2024 was unchanged, apart from gross capital expenditure guidance.
Having taken advantage of "a number of high returning freehold purchases" in the UK, Ireland and Germany, Whitbread said it increased its gross capital expenditure guidance to GBP500 million to GBP550 million from a previous GBP400 million to GBP450 million, partially funded by expected disposal proceeds relating to property transactions of between GBP50 million and GBP100 million.
By Greg Rosenvinge, Alliance News reporter
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