Whitbread targets extra £300m in profits by 2030 after profit slump

Whitbread has set a target of making at least £300m more in annual profits and delivering more than £2bn to investors by 2030, after a drop in profits in the first half.

The owner of Premier Inn said it was making “excellent progress” in its five-year plan to expand its property to 98,000 rooms and “optimize” its food and drink offering by exiting less profitable restaurants.

But Whitbread reported a 13 per cent decline in adjusted pre-tax profits to £340m for the six months ending August 29.

Whitbread said profits were hit in part by converting half of its branded restaurants to a full-service offering under its “accelerated growth” plan.

This also hit the FTSE 100 company’s revenues, which remained stable at £1.6bn, despite strong growth in Germany and accommodation levels in the UK outperforming the wider market.

Nationally, occupancy rates fell 1.3 percentage points to 83.1 per cent, with London properties seeing a bigger drop than the regions, while revenue per available room was 2 per cent lower, up to £69.93.

However, Whitbread said UK sales had improved in the first six weeks since the first half trading period ended, while accommodation revenue in Germany had risen 26 per cent more than last year.

Dominic Paul, chief executive of Whitbread, said: ‘In the UK, we have a clear path forward to further expand our leading market position and capitalize on the favorable UK supply environment.

“We are determined to build on our significant outperformance since the pandemic and, although the market has been slightly weaker than last year, we remain on track to substantially increase our UK profitability over the medium term.”

Whitbread has announced a 7 per cent rise in its dividend to 36.4p per share and a £100m share buyback programme.

According to its transformation plan, the company intends to get rid of 126 brand-name restaurants with poor results and convert another 112 into 3,500 hotel rooms.

The group’s hospitality business includes the Beefeater and Brewers Fayre brands, as well as Table Table and meat outlet Bar+Block.

Julie Palmer, partner at Begbies Traynor, said: ‘Despite the challenging backdrop, Whitbread has made encouraging strategic progress by moving away from its worst-performing individual restaurants and focusing on the hospitality business.

“If the economy continues to stabilize and consumer confidence begins to rebuild, Whitbread’s emphasis on hotel expansion should position it well for increased demand for travel and accommodation during the vital Christmas period.”

white bread stock They were up 4.3 per cent on Wednesday morning at £32.03, but have still fallen around 11 per cent so far this year.