Whitbread PLC is a multinational hotel, coffee shop and restaurant company headquartered in Dunstable, United Kingdom. Its largest division is Premier Inn, which is the largest hotel brand in the UK with around 650 hotels and over 50,000 rooms. Its Costa Coffee chain has 2,861 shops across 30 countries as of May 2014 and is the world's second-largest international coffee shop chain.[3] Its other brands include the restaurant chains Beefeater Grill, Brewers Fayre, Table Table and Taybarns.

Whitbread post sales and revenues release

 Pre-tax profit came in higher than our expectations by 1%. Reason for this increase in profitability was mainly fuelled by its Costa Coffee chain.

Our sales forecast was above what the company reported. The reason for this was due to a slowdown in demand due to the terrorist attacks end 2015. We believe this to be a one off and sales to resume to normal levels.

Premier Inn LFL sales up 4.2%, Costa U.K. LFL sales +2.9%

Six weeks into new FY indications are that Costa U.K. has had a good start to the year and Premier Inn is growing share in a flat market; however trading comparators have been impacted by the early timing of Easter

In January, Alison Brittain took over as CEO from previous CEO Andy Harrison

Outlook

• The CEO reiterated goals to expand the business to 85,000 U.K. hotel rooms and £2.5 billion of coffee-shop sales by 2020.

Dividend

• Increase in FY dividend of 10% to 90.35p

Going forward:

Management is focusing on 3 ‘key strategic themes’ to growing business:

• Grow and innovate in core U.K. businesses
• Focus on strengths to grow internationally
• Build capability, infrastructure to support long-term growth

Conclusion

Whitbread reported a strong set of results for FY16. The fact that management left FY2017 guidance unchanged is a positive as well as the increase in dividend paid out to shareholders.

Although we are confident that the Group will meet targets going forward, Brexit remains a short term risk

This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.