Whitbread beats target and hikes dividend

Britain's biggest hotel and coffee shop operator Whitbread reported higher-than-expected first-half pre-tax profits and ramped up its interim dividend by over 50 per cent.

Whitbread, which operates the Premier Inn and Costa Coffee chains, said underlying pre-tax profits rose by 15.2 per cent to £174.9m in the six months to 1 September against a consensus forecast of £167m, according to a company-supplied poll of eight analysts.

The company, which also owns the Beefeater and Brewers Fayre pub-restaurant chains, said it would pay an interim dividend of 17.5 pence per share, up from 11.25p last year and ahead of the consensus forecast of 16.5p.

"This is a good set of results demonstrating the strength of our brands in tough market conditions," Chairman Anthony Habgood said.

"The strong first-half performances of our two main growth engines, Premier Inn and Costa, give us confidence to continue to expand the business."

Underlying profit at the hotel and restaurant business was up 8.5 per cent to £167.1m, while Costa's underlying profit increased by 42 per cent to £27.8m.

Premier Inn has performed strongly through the economic downturn, benefiting from business customers trading down from four-star and five-star hotels and a £29 per-room offer wooing leisure customers in off-peak periods.

Costa has also fared well, being seen as an affordable luxury by many consumers.

Whitbread said it was on track to achieve its five-year targets to expand Premier Inn by 65,000 rooms and open 3,500 Costa stores worldwide.