Hospitality group's surge in profits defies economic gloom
The Week Ahead
Published 18/10/2011 | 08:00
Considering that you can drink, eat and sleep at Whitbread-owned businesses, it is fair to say that results from the leisure group provide a fairly wide-reaching snapshot of the British consumer.
Despite the current economic situation, the company's second-quarter figures in September impressed, and rightly so.
Like-for-like sales at its Costa Coffee chain frothed up 9.7%, while Premier Inn enjoyed a 7.1% jump.
However, today's interim results will still see investors looking out for "any signs of a slowdown in the third quarter and beyond", according to Deutsche Bank. But analysts from the German broker believe it will post a pre-tax profit for the first six months of £162m, even taking into account the pressure on consumers' wallets.
That would be a 7% year-on-year rise, but Morgan Stanley is even more bullish. Predicting a "strong first half", it estimates a 14% increase to £173m, boosted by profits at Costa rising by a huge 43%.
The broker's scribblers believe the unit will have been helped by new products and changes to its stores, while adding that "the international businesses are increasingly contributing to the bottom line".
They also feel that dynamic pricing will have given a boost to the group's Premier Inn budget hotel chain, although they will be watchful for comments on Whitbread's hotel strategy away from these shores "where the company aims to reduce its capital exposure".
Bellway has enjoyed a rise of more than 25% in less than two months, so the housebuilder will hope it can continue the trend following its preliminary results on Tuesday.
Numis Securities' Chris Millington is optimistic, forecasting a "strong update... at the upper end of analyst expectations", and predicts its earnings margin will increase to 8.5% - 200 basis points higher than the previous year.
When BSkyB released its full-year results back in July, its net new TV subscribers over the final quarter of 40,000 disappointed some in the City.
However, Deutsche Bank's analysts believe that, with the broadcaster's first quarter figures out on Wednesday, the market should start to concentrate more on sales of all of its products, including broadband and telephone line rental.
Deutsche thinks that net additions to Sky's satellite TV service are again likely to be "modest" thanks largely to current economic pressures, adding that the period "will be a good test of the revenue and earnings growth Sky can deliver without expansion in the pay-TV base."