Whitbread had released its third quarter results showing total sales growth of 2.5% and strong progress with efficiency its programme.
During the period, the sale of Costa to The Coca-Cola Company for £3.9bn completed on 3 Jan 2019, ahead of schedule. The initial £500m share buyback programme has commenced today.
Over 2,000 new rooms have been added in FY19 so far, and occupancy has remained high at over 80%.
Whitbread expects to deliver FY19 results in-line with expectations, but remains cautious on UK environment in the next financial year, given the uncertainty and higher inflation
FY20 underlying profit before tax is expected to be consistent with this year, as the company continues to invest in UK & international growth.
CEO Alison Brittain said, 'This has been a momentous year for Whitbread, with the sale of Costa to The Coca-Cola Company for £3.9 billion completed on 3 January 2019, much sooner than expected. We are now commencing an initial share buyback programme of up to £500 million, with further details about our plans to return a significant majority of the net cash proceeds to shareholders at our Capital Markets Day on 13 February.
'Whitbread is now a focused hotel business with over 800 hotels in the UK, Germany and the Middle East, operating under the Premier Inn brand, with a committed pipeline of over 20,000 additional rooms. Premier Inn has made good progress this year, growing total sales by 2.5%, which along with strong results from our efficiency programme, means we are on track to achieve full year expectations for FY19.'
Brittain continued, 'The UK business achieved total accommodation sales growth of 3.5% in the third quarter. Our performance in the quarter reflects a strong Central London market and a weak regional market. We are cautious about the macro environment for the next financial year due to increased uncertainty and continuing high inflation. Although we are confident in our ability to create value from ongoing investment in the UK and increasing investment in international growth, in this environment we expect underlying profit before tax in FY20 to be consistent with this year.
'We continue to be excited about the opportunity in Germany and our first hotel in Frankfurt remains the number one choice for customers. Our second hotel in Germany will open in Hamburg in February and this year we have continued to extend the total committed pipeline in Germany, which now stands at over 6,000 rooms across 34 hotels.'
Brittain concluded, 'Our unique model and leading market position in the UK puts us in a strong position to capture structural growth opportunities in the UK and internationally. Investing in growth through our disciplined approach to capital allocation ensures we can create sustainable value for shareholders over the longer-term. We look forward to presenting this in further detail at our Capital Markets Day.'