Whitbread shares rose on Tuesday following the release of a very respectable set of results for the crucial summer trading period.

Whitbread reported sales of £661.1m for the first half of 2021 which was significantly above the £250.8mm recorded in the first half of last year.

Whitbread were only able to accept business customers until 17th May this year meaning although revenue was much stronger than last year, it was 39% below pre-pandmeic levels.

Whitbread shares gained over 3% on Tuesday morning following the release of the revenue figures.

“It’s taken a while for Premier Inn owner Whitbread to regain momentum, but with trading ahead of pre-pandemic levels over the summer holidays and well ahead of the wider market the group looks well placed going into 2022. Management have gone so far as to say they think revenues may fully recover this financial year,” said Nicholas Hyett, Equity Analyst at Hargreaves Lansdown. 

“The pandemic has likely seen smaller operators forced to close, creating a  gap into which Whitbread can expand in the UK. Meanwhile expansion in Germany is gathering speed with a pipeline that has the potential to more than double the current active estate. However current bookings in Germany remain low and the group has work to do in improving its brand visibility.”

Leisure demand returns

Whitbread outlined where they saw demand recover and said they were confident in

“Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-COVID-19 levels in the last six weeks of the half,” said Alison Brittain, Whitbread Chief Executive Officer.

“This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople. Whilst some uncertainty remains over the speed and timing of the market recovery for office-based and international demand and the evolution of the pandemic in the winter months, we believe that UK like-for-like RevPAR run rates have  the potential to reach full recovery in at some point during 2022.

“The operating environment during the summer and into autumn has been challenging largely as a result of our very high occupancy levels, market-wide supply chain issues and a tighter labour supply in the hospitality sector. Although we are not immune from these challenges, we are well placed to respond. Our £100m efficiency programme is well underway and we are “investing to win” in our teams, our hotels and our marketing, in order to continue to grow our market share as demand recovers and as our competitors continue to be under pressure.”

“In Germany, we are well on the way to building a business of scale with a growing national presence. Our open and committed hotel network now stands at 73 hotels, and we continue to look for opportunities to grow our footprint at pace both organically and through acquisitions. The budget hotel market is recovering ahead of the overall market and we are seeing growing demand and occupancy levels in our open hotels, alongside encouraging customer scores.”

Reckitt Benckiser has released a robust set of third quarter sale figures that saw like-for-like revenue growth jump 3.3%.

Reckitt’s year-to-date sales rose 3.6% having recorded £9.8bn in sales.

“There’s a lot to like in this morning’s update from Reckitt Benckiser. There is a notable hike in sales forecasts, impressively, every division has outperformed expectations and the company has maintained margin guidance despite the inflationary pressures and supply chain issues which it, like all of its peer group are facing,” said AJ Bell investment director Russ Mould.

“This is testament both to the strength of its brands which have allowed the company to pass through price increases to its customers and to the ongoing transformation of the businesses under CEO Laxman Narasimhan.”

The group’s Helath division was a strong performer as cold and flu medicines bounced backed.

“In September, we reiterated the building blocks which will see Reckitt return to mid-single digit revenue growth and mid 20’s margins,” said Laxman Narasimhan, Chief Executive Officer of Reckitt Benckiser.

There is more to be done, but today’s results are testament to our progress, with 3.3% LFL revenue growth building on the 15.3% growth of Q3 2020. We’ve delivered growth in each of our three GBUs and in each of our three geographic regions, with a balance of volume and price/mix across the portfolio. Nine of our ten largest brands are up double-digits on a two-year basis.”

“Reflecting this strength, we now expect like-for-like net revenue growth for FY 2021 in the range of 1-3%. Despite significant cost pressures, the benefits of our pricing actions, mix and productivity programme, mean our margin guidance is unchanged, and we remain confident in our medium-term outlook.”

The FTSE 100 started the week with a spring in its step as London’s leading index neared post-pandemic highs.

The FTSE 100 was 0.34% higher at 7,229 in mid afternoon trade on Monday.

A mixture of strong corporate results and continued momentum in the FTSE 100’s miners helped lift the index.

HSBC

HSBC gained after it reported a $1.6bn pre-tax profit that beat estimates and CEO Noel Quinn said “we believe that the lows of recent quarters are behind us.”

“HSBC is a giant in its industry, and with signs of more positive economic conditions comes a brighter set of results. Pre-tax profits have been buoyed by a huge swing in expected credit losses – with a chunky charge this time last year, turning into a release that buffer this quarter. The group is so confident about the direction of travel, it’s announced a $2bn share buyback programme,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

“A CET1 ratio well above target risks looking like a waste of uninvested equity, and capital returns are one way to deal with that. However, a lack of available investment opportunities could be a potential concern for more growth minded investors.”

Uncertainty

Despite the strength of the FTSE 100 on Monday, some analysts warned that a number of upcoming events could cause uncertainties in markets which may lead to volatility.

“The combination of a pandemic, recession and supply-side destruction on one side, and massive monetary stimulus, fiscal stimulus and changes in working and consumption patterns on the other means that no-one knows what’s coming next – not even central bankers. If they did, they would hardly still be running policies that were described as emergency measures when they were launched in the wake of the Great Financial Crisis,” says AJ Bell Investment Director Russ Mould.