Whitbread reported strong results for the first six months of the year on Tuesday, seeing pre-tax profit rise by 5.4 percent to £307 million.
Whitbread, who own of Costa Coffee and Premier Inn, were boosted by strong coffee sales in the six months to September 1st. Costa saw total sales grow by 10.7 percent, with Premier Inn sales increasing by 8.9 percent.
Alison Brittain, Chief Executive, commented:
“In April this year, I identified three strategic priorities to develop our business: to grow and innovate in our core UK businesses; to focus on our strengths to grow internationally; and to build the capability and infrastructure to support long-term growth. This strategy will enable us to deliver continued growth, maintain good returns on capital and create sustainable value for our shareholders.
“I am pleased to report that we have made good progress in delivering on our three strategic priorities. We will be smoothing the phasing of our openings this year and plan to open 3,700 new UK Premier Inn rooms and 230-250 new coffee shops worldwide.
“Whilst it is early in the second half and there is uncertainty in the UK’s economic outlook, we expect to deliver in line with full year expectations.”
However Whitbread (LON:WTB) saw shares fell nearly 4 percent on the London Stock Exchange on Tuesday, currently trading down 3.96 percent at 3,691.00 (1407GMT). Costa saw underlying operating profit decrease by 4.0 percent to £64.6 million due to increased investments in the business.
In an interview with BBC Radio 4’s Today programme, Brittain noted the effect of the weaker pound on the business, saying, “Our key import in US dollars is coffee and so we are expecting next year to see that price rise”.
However, Whitbread remains “fully hedged” against the rising cost this year, so any increase in prices will not be until 2017.
Both Costa and Premier Inn have been affected by the increase in National Living Wage, introduced just over one year ago. Profit margins fell 1.8 percent year-on-year, of which 1.3 percent was attributable to the National Living Wage and investments.