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Whitbread (WTB) recorded a modest rise in profits in the first half of the year, after agreeing to sell its Costa coffee chain to Coca-Cola.
The owner of Premier Inn said it will focus on expanding its hotel business after announcing its plans to sell to Costa to Coca-Cola for £3.9bn in August.
Whitbread reported underlying profit before tax, which stripped out the coffee chain, rose 2.5% to £270m compared to last year, while sales jumped 2.6% to £1.1bn.
Statutory profits from Costa coffee jumped 3.5% during the period to £47m, despite the downturn on UK high streets.
The FTSE 100 company confirmed plans to invest heavily in its UK and German hotel businesses, with 13,000 and 6,000 rooms in the pipeline by 2021 respectively.
After activist pressure to spin off the Costa chain, Whitbread agreed to sell the UK’s largest coffee chain, 23 years after purchasing the business.
The sale has been approved by shareholders and is now waiting for the green light from regulators in China and the EU.
“The highlight of the first half was the announcement of our agreement for the sale of Costa to The Coca-Cola Company for £3.9 billion, which received the overwhelming approval of our shareholders in October,” commented CEO Alison Brittain.
“We intend to return a significant majority of the net cash proceeds to shareholders, although the exact amount, timing and method will be determined following discussions with stakeholders, including our shareholders, pension fund and debt providers.
“Much work still remains to be done to ensure a smooth and successful separation from Whitbread at completion and during the following transitional service period, which we are confident in our ability to execute efficiently.”
The group added it was “on-plan” to deliver its full-year results to target.
Morning update
Strong sales of household cleaning products have driven 5.5% underlying sales growth at own-label supplier McBride (MCB).
The cleaning and hygiene product manufacturer bounced back in the first quarter, after recording two profit warnings in 2018, which saw it fall 45% to 121p in July.
Total revenues at constant currencies rose 15.4% on the previous year, driven by the acquisition of Danlind for £10.8m in September 2017.
Household division sales jumped 5.3% on the back sharp sales increases in the East and the UK, up 20.8% and 11.3% respectively.
Raw material and packaging costs were “slightly higher than anticipated” but were mitigated by strong volumes and the supplier expects full year earnings to be in line with expectations.
“The Group is busy completing the sale of PC Liquids, integrating Danlind and managing revenue growth to expectations,” commented chief executive Rik De Vos.
“Margins continue to be a key focus especially against the backdrop of potentially further increased input costs.
“We continue to outperform our sector both financially and operationally in what is a particularly challenging environment and the Group is strongly positioned to exploit further growth and margin opportunities in the coming year and beyond.”
Elsewhere, Britvic CFO Mathew Dunn has announced plans to leave the drinks giant to become the finance chief at online fashion retailer Asos.
Dunn, who joined the supplier in 2015, will leave the business in April 2019 and has also tendered his resignation as an executive director. Britvic says it will now launch a search for his successor.
“Mat has made a significant and positive impact since joining Britvic 3 years ago. I would like to thank him for his important contribution and wish him well in his new role,” commented Britvic CEO Simon Litherland.
Mathew Dunn said: “It’s been an absolute privilege to work for Britvic. Over the last 3 years I have enjoyed working with Simon and the team immensely and I wish them and the Company continued success”.
The European markets have dived this morning amid a “thick blanket of risks” according to OANDA, with the FTSE 100 dropping 0.8% to 6,983pts, an eight month low.
Early risers this morning include Young & Co (YNGA), up 1.3% to 1,582.5p, Nichols (NICL), up 1.1% to 1,385p, and Mitchells & Butlers (MAB), up 0.7% to 259.9p.
The early fallers include Majestic WINE (WINE), down 3.3% to 385p, Premier Foods (PFD), down 3% to 38.8p, Devro (DVO), down 2.3% to 180p and PayPoint (PAY), down 2.2% to 848p.
Yesterday in the city
Despite an upturn around Midday, the FTSE 100 dropped off as the pound fell to a six-week low, with the UK index falling 0.1% to 7,042pts.
Personal care supplier McBride jumped 6.9% to 138.8p as US competitor Kimberly-Clark faltered, falling 3.5% in the New York Stock Exchange after announcing its CEO Thomas Falk will be leaving after 16 years at the helm.
Another significant riser was B&M European Value, which rose 4.3% to 402p, after agreeing to buy French general merchandise retailer Babou in a deal valued at €91.2m.
Other big risers yesterday included PureCircle Limited (PURE), up 8.6% to 342p, Treatt (TET), up 4.1% to 440p, Nichols (NICL), up 3% to 1,370p, and Wincanton (WIN), up 2.7% to 208p.
Greencore’s (GNC) shares have dipped once again after a 5% slump last week following the announcement of its US exit. Yesterday it slipped 3.7% to 187.8p.
Other fallers included Domino’s Pizza Group (DOM), down 3.3% to 257.9p, Stock Spirit Group (STCK), down 3.1% to 196.2p and Applegreen (APGN), down 2.4% to 520p.
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