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Whitbread sees profits fall amid Brexit uncertainty

Whitbread has just released its interim results showing broadly flat revenue of £1,078 million.

Total UK accommodation sales declined slightly by 0.6% and like-for-like accommodation sales declined by 3.6%, impacted by continued weak regional market conditions.

Adjusted profit before tax decreased by 4.1% in-line with like-for-like sales decline, a decrease in operating margin offset with a benefit from lower finance costs.

Statutory profit for the period (incl. Costa in H1 FY19) decreased from £234m by 26.3% to £172m in line with adjusted profit before tax and due to the sale of Costa, contributing to £47m of profit in H1 FY19.

CEO Alison Brittain commented, 'We have delivered a resilient first half profit performance despite challenging market conditions in the UK. Shorter-term trading conditions in the UK regional market have been difficult, particularly in the business segment where we have a higher proportion of our revenue, whilst trading in London remained strong.

'Against this challenging backdrop, we have a number of activities underway which continue to build our brand strength as the UK's favourite hotel chain.'

Brittain continued, 'We are enhancing and optimising our UK hotel network and have successfully trialled new higher specification 'Premier Plus' rooms in two hotels, with fantastic customer feedback.

'We are on track to have 500 Premier Plus rooms this year, with ambitions for a total of 2,000 over the next year. We have also made good progress in delivering our ambitious efficiency targets, helping to offset part of the ongoing industry-wide inflation.

'In Germany, our confidence in the long term opportunities grows and our expansion plans are firmly on target. Our German pipeline has increased 25% to 7,280 rooms over the last year and we continue to look for ways to accelerate our ambitions.

'We have opened new organic hotels in Hamburg and Munich, which are both performing well and we are also making good progress in preparation for completing the 19 hotel acquisition in February 2020, with 13 hotels to be rebranded to Premier Inn in the first half of next year.'

Brittain concluded, 'Whilst the near-term market conditions in the UK remain uncertain, we have confidence in the long-term structural opportunities available in the domestic budget travel markets in the UK and Germany.

'Following successful completion of our return of surplus capital programme, we still have a strong balance sheet, providing support for ongoing disciplined deployment of capital, which will deliver growth over the longer term.'