Costa owner Whitbread sees half-year profits jump

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The owner of coffee chain Costa and hotels operator Premier Inn today reported a 13.8 per cent jump in first-half earnings.

Whitbread said underlying pre-tax profits for the six months to 27 August rose to £291.3 million, from £256m a year earlier, on total revenues 11.3 per cent higher at £1,4 billion.

Total sales at Whitbread's Costa coffee chain jumped 16.2%

Total sales at Whitbread's Costa coffee chain jumped 16.2%

However, the group – which has about 48,000 staff – warned it faces extra costs of up to £20m a year from the new national living wage. It has already increased wages for baristas at Costa by about 10 per cent to take pay above the rate, which kicks in at £7.20 an hour for workers aged 25 and above from April 2016.

Premier Inn grew its total sales by 12.6 per cent to £642.1, while takings at Costa soared 16.2 per cent to £514.6m.

Chief executive Andy Harrison, who will be succeeded by former Lloyds executive Alison Brittain on 7 December, said: “Trading momentum in the early weeks of the second half has been consistent with that seen across the first half. We remain on track to deliver full year results in line with expectations.

“This year we plan to invest around £700m in driving our organic growth and further improving the quality and consistency of our customer experience. We expect to open around 5,500 net new UK rooms and around 220 net new Costa stores worldwide.”

The interim dividend, to be paid on 18 December, was hiked by 13.1 per cent to 28.5p a share.