Whitbread Plc (WTB)’s full-year earnings rose 16.5 percent, beatings analysts’ estimates, after sales jumped at its Premier Inn hotels and Costa Coffee chain. The company plans to raise its annual dividend by about 20 percent.
Underlying pretax profit climbed to 411.8 million pounds ($692.5 million), or 179 pence a share, in the year to Feb. 27 from 353.4 million pounds, or 149 pence, a year earlier, the Dunstable, England-based company said in a statement today. The average of 14 analyst estimates was for earnings of 401 million pounds, according to data compiled by Bloomberg.
“Once again strong cash flow funded the necessary capital investment for our growth engines, Premier Inn and Costa, to increase their share of the market,” Chairman Anthony Habgood said in the statement.
Demand for U.K. hotels is rising as the British economy recovers. Revenue per available room will climb 2.4 percent in London and 1.8 percent in Britain’s regions this year, according to a forecast by PricewaterhouseCoopers LLP.
Whitbread gained as much as 3.4 percent in London trading. The shares were up 1.7 percent at 4,130 pence at 9:06 a.m.
Revenue at Premier Inn increased by 13.4 percent in the period, while sales at Costa rose 20.1 percent. Premier Inn’s like-for-like revpar, an industry measure of occupancy and rates, increased by 4.3 percent. Whitbread plans to pay a dividend of 68.8 pence a share.
Whitbread’s sales rose in the first two months of the current financial year on improved weather compared with a year earlier, Chief Executive Officer Andy Harrison said by phone. Results may be weaker at the end of 2014, as the year-ago comparison becomes less favorable.
“Last year we had a relatively weak first quarter and second quarter, and a very strong fourth quarter; it’s quite possible that this year may be a mirror image of that,” Harrison said. “It’s more about a weather comparison than anything to do with underlying economics.”
Whitbread’s profit growth in coming years will come from adding locations, Harrison said. Whitbread plans to increase Premier Inn’s U.K. rooms to about 75,000 by 2018 from 55,000 at the end of February. It also plans to double Costa’s global sales to 2 billion pounds.
The company expects to open 300 Costa coffee shops in 2014, including 150 in the U.K., he said.
“Organic growth is going to be the main driver of our returns in the next few years,” said Harrison.
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