- Premier Inn UK recovery lifts hotel group
- £300 million share buy-back programme announced
- Whitbread positive on Premier Inn Germany prospects
Shares in the UK’s leading hospitality and hotel group Whitbread (WTB) rose 5.8% to £33.06 in early trading - one of the highest risers in the FTSE 100 - as it reported adjusted pre-tax profit of £413 million for the 12 months to 2 March 2023 compared to a loss of £16 million a year earlier.
The firm attributed the rise to a recovery in trading from Premier Inn UK. Significantly profit was also 15% above pre-pandemic levels.
Although Premier Inn Germany, reported an adjusted pre-tax loss of £50 million due to ongoing expansion, Whitbread remained upbeat about this market: ‘We are making good progress in Germany, with 51 hotels open, giving us the confidence that we can achieve our long-term target of 10-15% return on our £1 billion of committed capital.’
DIVIDEND INCREASE AND OUTLOOK
Investors also welcomed news of a recommended final dividend increase of 43% to 49.8p per share and a £300 million share buy-back programme to be completed in the first half of the 2024 financial year.
Investment bank Jefferies commented: ‘We expect shares to react positively on news of potential for consensus upgrades, £300million share buybacks in H1, positive commentary around German market recovery, German acquisition and unchanged opex (operating expenditure) inflation backdrop.’
Whitbread hopes to open up 2,000 rooms in the UK in the current financial year as part of wider plan of 7,400 rooms. It also plans to open 1,000 to 1,500 rooms and refurbish around 900 rooms (from its latest acquisition) in Germany.
ANALYSTS AT SHORE CAPITAL UPBEAT
Greg Johnson, research analyst at Shore Capital said: ‘Forecast wise, we had assumed that FY24F PBT would be down c£10million year-on-year reflecting ongoing cost pressures only be partly offset by room supply growth, reduced losses in Germany and modest UK LFL (like-for-like) growth (Q1 catch-up).
‘Today’s results talk of increased confidence that Whitbread can offset cost inflation in the UK through LFL growth and new rooms, with requires LFL growth of c3-4%, with current trading markedly ahead.’
