Whitbread H1 profit hit by turnaround costs but FY outlook backed
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Whitbread reported a fall in first-half profit on Tuesday as it took a hit from costs associated with its strategic review and ‘Accelerating Growth Plan’, but the Premier Inn owner backed its outlook for the year.
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In the six months to 27 August, adjusted pre-tax profit declined 9% to £287m, while statutory pre-tax profit tumbled 62% to £109m.
Whitbread said adjusted pre-tax profit reflected a strong trading performance in the UK and Ireland and Germany, offset by temporary transition costs associated with its extended AGP, high cost inflation - including business rates - and in-year impacts in Germany, mainly associated with new room openings.
Statutory pre-tax profit was hit by £178m of adjusting items driven by non-cash impairment charges associated with the strategic review and the AGP.
Statutory revenue ticked up 2% to £1.6bn and the dividend per share was unchanged at 36.4p.
Premier Inn UK & Ireland total accommodation sales and revenue per available room (RevPAR) rose 3% and 2% respectively. Whitbread said the strength of its brand and technology-led commercial programme meant it outperformed the midscale and economy (M&E) market by two percentage points on RevPAR growth and increased its RevPAR premium to £7.75.
Premier Inn Germany saw total sales grow 19% in local currency, and the company said it continued to outperform the M&E market.
Also on Tuesday, Whitbread urged its shareholders to vote against activist investor Corvex Management's demand for a seat on the board.
Chief executive Dominic Paul said: "With excellent strategic progress and strong current trading momentum, our plan is working. Against this positive backdrop, the board strongly recommends that all shareholders vote against the resolution proposed by Corvex at the forthcoming shareholder meeting.
"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."