Whitbread to expand food retailing side: Interim figures of pounds 135.7m exceed expectations

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The Independent Online
WHITBREAD is stepping up its restaurant opening programme after its food retailing businesses financial half-year that exceeded stock market expectations.

Sir Michael Angus, chairman, plans to open Brewers Fayre outlets - which are technically part of the inns division - at a rate of one a week in 1994 after adding just 16 in the six months to 28 August.

Some 70 Pizza Hut kiosks or restaurants will be added to the 326- strong chain; and there should be about 300 rather than the present 273 Beefeaters by 1995.

The 'A' shares rose 19p to 519p in response to a 13.4 per cent rise in pre-tax profit to pounds 135.7m. Turnover rose by 2 per cent to pounds 1.19bn and earnings per share by 19.6 per cent to 20.89p. The dividend is up 5.3 per cent to 5p.

But the buoyancy of trading was masked by an additional pounds 8m pension fund contribution and an average of 450 fewer pubs in the Whitbread Pub Partnerships compared with the same period last year.

Higher pension fund contributions were needed because the growth in stock market dividends is not as strong as it was and the change in advance corporation tax has reduced income.

The only black spot was beer and other drinks. Both turnover and operating profit were slightly lower and a determination to resist price cutting led to a small reduction in market share in the free on-trade sector.

Profit before tax excluding non- operating items, which Whitbread prefers as a measure of its underlying performance, rose 4.1 per cent to pounds 132.3m and earnings per share, similarly adjusted, rose 5.4 per cent to 20.14p.

Peter Jarvis, chief executive, said these results had been achieved without the help of a recovery in its markets. But he had confidence in the future providing there were no nasty surprises in the Budget.

'I trust that the Chancellor will enhance these prospects at the end of the month and help us to get a sustained recovery. If we get a bit of help from him 1994 should be a very good year,' he said.

Cash inflow rose to pounds 62m from pounds 8m and all four divisions had a positive cashflow. Gearing fell to 15.4 per cent from 16.3 per cent.

Whitbread has received more than 90 per cent acceptances for its recommended offer for Whitbread Investment Company and hopes to declare the offer unconditional shortly.

The 'B' shares were unchanged at 1,138p.

(Photograph omitted)