Whitbread targets extra profits of £300m by 2030 after profit decline

Whitbread has set a target of making at least £300m more in annual profits by 2030, giving investors more than £2bn, after a profit slump in the first half of the year.

The owner of the Premier Inn said it is making “excellent progress” on its five-year plan to expand its estate to 98,000 rooms and “optimize” its food and drink offering by exiting lower-return restaurants.

But Whitbread reported a 13 percent fall in adjusted pre-tax profits to £340 million for the six months ended August 29.

Whitbread said profits were partly impacted by the conversion of half of its branded restaurants from full-service offerings under its ‘accelerating growth’ plan.

This also affected the FTSE 100 company’s revenues, which were flat at £1.6 billion, despite solid growth in Germany and accommodation levels in Britain outperforming the wider market.

Domestically, occupancy fell by 1.3 percentage points to 83.1 per cent, with London locations seeing a bigger decline than the regions, while revenue per available room was 2 per cent lower at £69.93.

Still, Whitbread said UK sales had improved in the first six weeks since the end of the first half of the trading period, while accommodation revenue in Germany was 26 percent higher than last year.

Dominic Paul, CEO of Whitbread, said: “In the UK we have a clear path to further build on our leading market position and capitalize on the favorable UK supply backdrop.

‘We are committed to building on our significant outperformance since the pandemic, and while the market has been slightly softer than last year, we remain on track to grow our UK returns substantially over the medium term.’

Whitbread has announced a 7 percent dividend increase to 36.4p per share and a £100 million share buyback programme.

As part of the transformation plan, the company wants to fire 126 underperforming branded restaurants and convert another 112 into 3,500 hotel rooms.

The group’s catering activities include the Beefeater and Brewers Fayre brands, as well as Table Table and steakhouse Bar+Block.

Julie Palmer, partner at Begbies Traynor, said: “Despite the challenging circumstances, Whitbread has made encouraging strategic progress by moving away from underperforming individual restaurants and focusing on the hotel sector.

‘As the economy continues to stabilize and consumer confidence begins to rebuild, Whitbread’s focus on hotel expansion should position the country well for increased demand for travel and accommodation over the crucial Christmas period.’

Whitbread shares were up 4.3 per cent to £32.03 on Wednesday morning, but are still down around 11 per cent so far this year.