Whitbread Delays Returning Funds to Investors
By Sarah Davies
Premier travel inn owner Whitbread yesterday said it would delay plans to return cash to shareholders amid the current turmoil in financial markets. The Luton-based company, which also owns the Costa and Beefeater chains, had been planning to issue bonds secured against its hotels and restaurants to return funds to investors after the pounds 925m sale of its David Lloyd Leisure chain.
But the group said it was in talks with advisers regarding the “most appropriate time to proceed” following the recent turbulence in credit markets.
The news came as the group issued another strong trading update with firm like-for-like sales growth across all its businesses.
Whitbread’s announcement comes after pubs group Mitchells & Butlers delayed a pounds 4.5bn property deal due to the volatility in debt markets earlier this month.
Whitbread said that despite the delay to the lion’s share of its cash return – which analysts have estimated could be worth up to pounds 950m – it would commence on a share buyback programme to return around pounds 300m to investors.
Meanwhile, the group reported an 11.3% rise in sales during the 24 weeks to August 16, with like-for-like sales up by 6.6%.
Hotels chain Premier Inn continued to drive the growth with like- for-like sales 11% ahead. Whitbread added that the expansion of the UK chain was in line with its plans, with 40% of additional rooms being built on company-owned sites.
Like-for-like sales at its restaurants rose by 2%, while margins also improved after a better operating performance offset a year-on- year reduction in discounts. The company is currently focused on remodelling its Brewers Fayre estate, with 41 sites completed so far.
Coffee chain Costa grew like-for-like sales by 7.2%, while total sales jumped 23.5% after a net 63 stores were added during the period.
Amanda Purton, equity analyst at Barclays Wealth, said, “Whitbread reported strong sales growth in its first half trading statement. We expect upgrades following these figures.
“On cash flow, the company is starting a share buyback programme, during which it can buy up to 10% of the share capital, but further cash returns will be delayed while the company waits for credit markets to stabilise. The latter point may be negative for sentiment.”
Shares in the group rose nearly 4%.: Heineken toasts UK growth as lager repositioned as a premium brand:Dutch brewing giant Heineken yesterday said it had seen “significant” UK growth despite a decline in the domestic beer market. The brewer said Heineken’s UK volumes had increased 27% after its repositioning of the lager as a premium brand gained momentum.
Heineken, which also brews Amstel lager, added that European sales benefited from good weather as overall underlying profits for the group increased more than 33% to 548 million euro (pounds 372.1m) in the first half of 2007. Heineken also enjoyed growth in Ireland, Italy and Spain over the first half, although poorer weather in June dampened the strong start to the year.
Underlying earnings from Western Europe were more than 12% ahead at 332 million euro (pounds 225.5m) as the company gained from the continued roll-out of its DraughtKeg, a pressurised pub-style beer barrel.
The five-litre DraughtKeg has now been launched in more than 60 countries with sales topping five million to the end of June.
The company has upgraded full-year profits forecasts on the back of its healthy start to 2007 as the brewer also saw strong growth in Central and Eastern Europe, Africa and Asia, although growth is expected to continue at a “more moderate” pace in the second half of the year. The company added that it was also on track to meet targets of cutting 450 million euro (pounds 305.6m) in costs by 2008.
(c) 2007 Western Mail. Provided by ProQuest Information and Learning. All rights Reserved.