Whitbread reports 14 per cent profit increase

<p>The owner of Costa Coffee said it was on-track to deliver full-year results in line with expectations.</p>

Whitbread Plc, the owner of Costa Coffee and Premier Inn, has reported a 14 per cent profit increase during the first half of the financial year.

The company says that new openings and growing demand for its brands have helped to give sales a boost.

As the UK's biggest hotel and coffee shop operator, Whitbread said it remained on track to deliver full-year results that were in line with previous expectations.

International expansion

Expansion targets for both business were increased earlier this year. Premier Inn has been focusing on London, while Costa's reach increased to 29 countries outside of the UK, including locations in the Middle East, South East Asia, Germany and India. The company also plans to open around 50 new Costa stores in China – however, it warned there had been a "slight softening" of its performance there due to the country's recent economic slowdown.

Chief executive Andy Harrison told Reuters that the brand is popular in China. "We have got a strong store network, not just in the major cities but in some of the Tier 2 cities as well [...] Chinese Consumers love Costa," he said.

Organic growth

In recent years, Whitbread has grown rapidly. This has been due to a number of factors, including increased demand from price-conscious customers who want affordable hotels and takeaway coffee.

Whitbread said its underlying pretax profit rose to £291.3 million in the six months to August 27th, that's compared to £256 million in the previous year.

"Our two leading brands have delivered strong organic growth and continue to win market share", Mr Harrison said.

Revenue for the period rose 11.3 percent to £1.43 billion. This reflected sales growth of 12.6 percent at Premier Inn and 16.2 percent at Costa Coffee.

The company has also raised its interim dividend to 28.5 pence – last year, it was 25.2 pence.

On Tuesday morning (October 20th), shares in the company rose around three per cent to 4,864 pence making Whitbread the top gainer on the FTSE 100.

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