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Investing.com -- Whitbread (LON:WTB) shares fell more than 8% on Thursday after the UK-based hospitality group reported first-half 2026 results, despite beating profit expectations, as it warned of higher costs in the UK and reduced its profit forecast for Germany.
Revenue for the six months ended September fell 2% year-on-year to £1.54 billion, slightly above the consensus of £1.53 billion.
Adjusted profit before tax declined 9% to £316 million, 4% above the consensus estimate of £305 million. Adjusted earnings per share were 133.7p, down 2% from a year earlier but above the consensus of 129p.
Premier Inn UK reported a 1% year-on-year decline in revenue per available room, improving from a 2.4% decline in the first quarter.
Total UK revenue fell 3%, including flat accommodation revenue and an 11% drop in food and beverage sales.
Adjusted profit before tax for the UK business declined 7% to £331 million, slightly above the consensus of £324 million.
In Germany, revenue per available room rose 2% for the half, following a 10.2% increase in the first quarter.
Total revenue increased 9%, including a 7% rise in accommodation and a 19% increase in food and beverage sales.
Adjusted profit before tax rose £6 million to a loss of £3 million, in line with the consensus.
Full-year guidance for Germany’s profit before tax was revised down to up to £5 million from a previous range of £5-10 million.
Free cash flow fell to £102 million from £206 million, reflecting higher capital expenditure, which rose from £199 million to £328 million.
Net debt stood at £563 million, with lease-adjusted net debt to EBITDA at 3.2x, below the 3.5x threshold.
Whitbread declared an interim ordinary dividend of 36.4p, slightly below the consensus of 36.91p. A £250 million share buyback program remains on track.
Property valuations were updated to £5.5 billion-£6.4 billion, up from £4.9 billion-£5.8 billion previously.
Current UK trading shows accommodation sales and revenue per available room up 3% year-on-year, with forward bookings ahead of last year.
In Germany, a soft start to September was followed by increased market demand, lifting accommodation sales by 9%.
Whitbread updated full-year 2026 guidance to reflect UK net cost inflation at 2-3%, partially offset by incremental savings of £65-70 million. Lease costs are expected to be £5-10 million higher following a sale and leaseback transaction.