Release Date: October 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Whitbread PLC (WTBCF, Financial) outperformed the mid-scale and economy segment in the UK accommodation market despite challenging comparators.
- The company has a positive forward booking position for October and November, indicating strong future demand.
- Whitbread PLC (WTBCF) increased its cost savings guidance to GBP60 million, a GBP10 million uplift, showcasing effective efficiency measures.
- The company is on track to breakeven in Germany on a run rate basis later this year, highlighting successful international expansion.
- Whitbread PLC (WTBCF) plans to deliver an additional GBP300 million in profit over the next five years, supported by a robust five-year plan.
Negative Points
- The UK market has been softer compared to last year, impacting overall demand.
- Revenues were affected by the decision to transform the food and beverage offer, indicating potential short-term financial strain.
- The macroeconomic backdrop in Germany is less favorable, which could pose challenges to growth.
- There is uncertainty around future inflation and market growth, which could impact financial projections.
- The company's leverage is above pre-COVID levels, raising concerns about financial stability in a high-interest rate environment.
Q & A Highlights
Q: Why has Whitbread announced a long-term profit target now, and should we expect annual share buybacks?
A: Dominic Paul, CEO, explained that the five-year plan consolidates various strategic initiatives to provide clarity on future business direction. The plan is fully funded, and while there are no current plans for M&A, the company will continue to use its capital allocation framework, which includes share buybacks, as evidenced by the GBP100 million buyback announced.
Q: Can you elaborate on the expected growth and profitability in Germany by 2030?
A: Dominic Paul stated that the German market is maturing well, with hotels performing ahead of the market. The company is confident in achieving GBP70 million PBT by 2030, driven by self-help initiatives and a maturing estate, despite macroeconomic uncertainties.
Q: How is Whitbread planning to manage cost inflation in the UK, and what is the outlook for next year?
A: Hemant Patel, CFO, mentioned that while specific guidance for next year isn't available yet, the company plans to offset cost inflation with efficiencies and like-for-like sales growth. The GBP20-25 million reversal from the accelerated growth program will also contribute positively.
Q: What are the recent trading trends, and how do they compare to earlier periods?
A: Dominic Paul noted a softer start to September but highlighted encouraging forward bookings for October and November. The company has seen a bounce back in business travel and expects a benign consumer environment, supported by strategic initiatives and commercial levers.
Q: How does Whitbread plan to expand its room product availability through digital partners like Trivago?
A: Dominic Paul explained that in the UK, over 90% of bookings are direct, but the company uses affiliates like Trivago to drive traffic to its website. In Germany, online travel agents are used more extensively to increase brand awareness and guest numbers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
