Whitbread shares were up 2.5% to 2,827p in early morning trading on Thursday, after the company announced a swing back to profit of £472.6 million, following a loss of £194.9 million after heavy lockdown restrictions last year crippled the group’s revenues.
The firm’s revenues increased to £1.7 billion from £589 million in 2020, beating analyst expectations despite its 17.8% decline on pre-Covid-19 levels.
The Premier Inn owner also reinstated its dividend with a final dividend of 34.7p, and added that it intends to bring back its policy to grow dividends in line with earnings.
“Investors will be pleased to see the dividend return for the Premier Inn owner, following a period of suspension where flexibility offered by lenders meant distribution taps had to turn off,” said Hargreaves Lansdown equity analyst Matt Britzman.
“With it back on the table, it sends a clear message to markets that sentiment is vastly improved and the return to profitability plus beat on top and bottom-line estimates adds weight.”
However, Whitbread confirmed its EBITDA remained 37.2% down against pre-pandemic levels.
The company said cost inflation reached higher than projected rates of 8-9%, however it reportedly aims to make up lost ground by reducing costs, growing its estate and increasing prices.
“The value offering that Premier Inn provides should hold it in good stead as rising costs for consumers eat into disposable income,” said Britzman.
“Inflation looks to be a bigger challenge than previously thought, with the group suggesting costs some 8-9% higher.”
“That’ll take some nifty management on costs and prices to overcome, but a challenge Whitbread’s confident it can overcome.”
