Whitbread shares retreat despite rise in pre-tax profit

Whitbread Plc, Britain’s biggest hotel and coffee shop operator, has revealed a rise in its first-half pretax profit of 6.7%.

The financial results come as a result of Whitbread's expansion drive whereby the company added more Premier Inn rooms and opened more Costa coffee outlets.

Despite the rise in revenues and underlying profits, Whitbread’s also reported a slump in shares as investors are increasingly focusing on rising costs at the company's Costa coffee chain and a slowdown in revenue growth at its hotel chain Premier Inn. 

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The group opened 2,000 new Premier Inn rooms in the UK in the six months to August 31 and launched new Costa breakfast and lunch menus. 

This helped to drive revenue growth of 7.4% to GBP£1.671bn from the same period last year. 

Whitbread also attributed revenue growth to “disciplined cost management.”  

“I am pleased with the progress we have made in executing the plan we set out in November last year, with earnings per share up 7.4% in the half and return on capital of 15.4%,” said Chief Executive Alison Brittain. 

“Our plan is based on growing in our core UK markets; focusing on structural growth opportunities for Premier Inn in Germany, Costa in China and Costa Express; and strengthening our capabilities and efficiency to deliver these attractive opportunities.”

Earlier this month Whitbread announced that it had acquired its south China joint venture partner for GBP£35mn, giving it full control.