Whitbread Holds Outlook as Profit Falls 9% and Board Fights Corvex Demand
Premier Inn owner Whitbread grew sales and outpaced the UK hotel market in the first half and held its outlook, but profit fell and an activist investor wants a board seat.
Whitbread (LON: WTB), the owner of Premier Inn, reported today that first-half adjusted profit before tax fell 9% to £287m, even as sales grew and it held its full-year outlook. The shares were up about 1.75% at 2,553.84p in a delayed quote at 8.08am, against yesterday’s close of 2,510p. They opened at 2,590p and have faded since.
In the UK and Ireland, accommodation sales rose 3% in the 26 weeks to the 27th of August. Revenue per available room (RevPAR, the standard hotel yardstick) rose 2% to £70.93, with occupancy at 81.0%, and Whitbread said RevPAR growth ran about 2 percentage points ahead of the market.
Current trading is stronger. In the five weeks to the 1st of October, accommodation sales rose 4.5% and RevPAR 3.2%.
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Sales did not reach profit. Group revenue rose 2% to £1,572m, but adjusted profit before tax fell from £316m. Whitbread cited cost inflation including business rates, higher lease and interest costs, and the cost of converting restaurants into hotel rooms.
Statutory profit before tax fell 62% to £109m after £178m of adjusting items, mostly non-cash impairments. Net debt rose to £663m from £563m, while the interim dividend was held at 36.4p.
Whitbread (WTB.L) daily closes from the 13th of July to yesterday, plus today’s delayed quote at 08:08 London time.
Whitbread said visibility of demand remains limited, but forward bookings are positive. Chief Executive Dominic Paul said:
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We are executing well and remain confident in both the full year outlook and the delivery of our Five-Year Plan that will generate £2bn available for shareholder returns by FY31.
Dominic Paul, Chief Executive, Whitbread
In Germany, accommodation sales rose 16% in local currency, but the segment still made an adjusted loss before tax of £8m, against £3m a year earlier.
The board also strongly recommended that shareholders vote against a resolution from activist investor Corvex. Corvex has requisitioned a general meeting on the 9th of November to appoint a director of its choosing to the board.
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