Whitbread shares slide despite profits rise

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The Independent Online

WHITBREAD, THE UK pubs to fitness group, yesterday failed to halt a prolonged slide in its share price as it unveiled first half profits up 3 per cent from the previous year.

WHITBREAD, THE UK pubs to fitness group, yesterday failed to halt a prolonged slide in its share price as it unveiled first half profits up 3 per cent from the previous year.

The company's shares have suffered a pounding since it failed in its bid to swallow up the pub estate of its rival, Allied Domecq, this summer. Yesterday, the stock tumbled 23.5p to 689.5p, hitting its lowest level since 1996, having reached a record high of £11.53 on early optimism that the Allied deal would go through.

Sir Michael Angus, Whitbread's chairman, said the company's failure to clinch the Allied deal had been "demoralising". But he added that Whitbread's strategy had not changed in the light of the "Allied experience". "We have a robust plan to deliver growth and shareholder value.... We intend to grow organically and by acquisition when the price is right."

Sir Michael also pointed to a major restructuring of the company's pubs and restaurant businesses, which is expected to produce cost savings of about £15m in the next financial year. Like-for-like sales for both units fell by 1 per cent in the first half, dragged down by a poor performance from the group's Brewers Fayre and Beefeater outlets.

Whitbread incurred an exceptional charge of £7.6m in the course of its abortive bid for Allied and £7.1m in restructuring costs at its joint venture, First Quench. It has ploughed £194m into beefing up its Travel Inns, David Lloyd Leisure clubs and Costa coffee shops, which all performed well in the first half. Whitbread's pre-tax, pre-exceptional profit for the six months to 28 August was £213.6m, compared with £207.3m the previous year, on adjusted turnover of £1.7bn.

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