Premier Inn owner, Whitbread, has reported a significant drop in first-half profits, with a 22% decline in pre-tax profits to £309 million for the six months ending on August 29. Despite this, the company has expressed optimism about its recent trading performance.
The hotel and pub group, known for brands such as Beefeater and Brewer’s Fayre, saw underlying pre-tax profits fall by 13% to £340 million. In response to the challenging financial results, Whitbread has intensified its cost-saving initiatives, aiming to cut costs by £60 million for the full year, up from their initial target of £40 million to £50 million. Additionally, the company plans to achieve annual savings of £50 million on average over the next five years.
Recent weeks have shown an improvement in trading for Whitbread, with a noticeable increase in bookings throughout October and into November. The company is optimistic that this trend will lead to a return to like-for-like sales growth in the latter half of the financial year.
Looking ahead, Whitbread has set ambitious goals to enhance profits and drive shareholder returns by 2030. The company aims to increase underlying pre-tax profits by a minimum of £300 million in 2029-30 compared to 2024-25, generating over £2 billion for dividends, share buybacks, and potential high-return investments.
Dominic Paul, the CEO of Whitbread, commented on the company’s progress, stating, “We are making excellent progress with our plans and over the next five years are set to deliver a step change in our performance which will fund significant returns to shareholders.”
In response to weak performances among some of its brands, Whitbread announced a restructuring of its food and beverage division earlier this year. This involved plans to reduce over 200 branded restaurants in favour of building more hotel rooms, leading to 1,500 job cuts. The company also outlined intentions to sell 126 less profitable branded restaurants and convert 112 others into hotel rooms.
Whitbread remains focused on enhancing its performance and delivering substantial returns to shareholders in the medium term, despite current market conditions being slightly softer than the previous year. The company is determined to build on its resilience post-pandemic and drive growth for the future.