Whitbread profits up despite poor trading

Brewing-to-hotels giant Whitbread has reported a 3% rise in pre-tax profits for the first half of 1999, despite difficult trading in its restaurants.

Restaurant operating profits fell by 4% to £28.9m during the six months to 28 August. Like-for-like sales at Beefeater were down by 1%, at Pelican by 1.8%, at Pizza Hut by 1.2% and at TGI Friday's by 0.6%.

The company said that the difficulties were due to a depressed eating-out market in the UK, where overall sales were down by some 4% during the first half of the year. However, Bella Pasta's like-for-like sales were up by 2.1% and Costa coffee bars were 8.3% ahead.

Said chairman Michael Angus: "While like-for-like sales are still negative, the trends have improved in the course of the year. We have restructured our pub and restaurant business to sharpen their competitive edge and improve returns.

"We continue to invest in growth segments of the leisure market through organic expansion and well-chosen acquisitions. We are confident about our prospects as our markets return to growth."

The restructuring (Caterer, 21 October, page 5) is expected to lead to cost savings of around £15m in the next financial year.

Hotels had a better six months. Turnover was up by 19% to £128m and operating profit up by 11% to £27m, although occupancy was down by 1% against last year. Marriott hotels achieved occupancy of 78% and an average price of £74.71 for each room. Occupancy at Travel Inn was 89% and room rate £35.36.

Alan Parker, managing director of the Whitbread Hotel Company, said that the increases in profit and turnover were the result of the contribution of newly opened hotels - particularly the Marriotts at County Hall in London, at Heathrow airport and in Manchester.

Operating profit in Whitbread's managed pubs was up by 1% at £97.2m and in leased pubs up by 12% to £35.6m.

Profits before tax and exceptionals for the group as a whole were up by 3% from £207.3m to £213.6m.