Costa Coffee owner reports 14% jump in profits

Whitbread’s profit rose about 14 per cent in the first half as new openings and growing demand at both its Premier Inn hotels and the Costa Coffee chain helped send sales up strongly.

Whitbread, Britain's biggest hotel and coffee shop operator, said it remained on track to deliver full-year results in line with expectations. Shares in company rose as much as 3 per cent, making it the top FTSE-100 gainer on Tuesday on the London Stock Exchange.

The group, which is expanding its presence in the Middle East, South East Asia, Germany and India, said it expected to open around 50 new stores in China but added that there had been a “slight softening” in its performance due to the slowdown in the country’s economy. “We have got a strong store network, not just in the major cities but in some of the Tier 2 cities as well ... Chinese consumers love Costa,” chief executive Andy Harrison told Reuters.

Whitbread has grown rapidly in recent years due to demand from cost-conscious customers for affordable hotels and takeaway coffee, which has driven growth at its Costa chain. The company increased its expansion targets for both its businesses earlier this year, with a focus on London for Premier Inn and an overseas boost for Costa, which now has a presence in 29 countries outside the UK.

Whitbread said its underlying pretax profit rose to £291.3 million in the six months to August 27th, from £256 million a year earlier. Revenue rose 11.3 per cent to £1.43 billion, reflecting sales growth of 12.6 per cent and 16.2 per cent at Premier Inn and Costa Coffee respectively. The company also raised its interim dividend to 28.5 pence from 25.2 pence last year.

Reuters