Buoyed by impressive profits growth, Whitbread hikes dividend by nearly 20%

Whitbread, the operator of Costa Coffee and Premier Inn hotel chains, on Tuesday announced an impressive rise in profits and rewarded its shareholders with a nearly 20 per cent increase in dividend.

Underlying operating profits of the FTSE-100 company climbed 16.5 per cent to £411.8 million year-on-year in the twelve months to February 27, 2014. Sales increased 13 per cent, while like-for-like sales jumped 4.2 per cent, owing to higher demand for reasonably priced rooms and takeaway lattes.

In addition, the group opened new stores, including four self-owned stores in Paris, France on trial basis last year. Now, it is planning to open five more store in France this year.

Announcing the plans, chief executive officer Andy Harrison said, "We have opened our own stores because we think France could be a big market. We've gone into Spain and have franchised there, whereas France we have gone in ourselves because we think it could be sizeable."

While Costa's total sales jumped slightly more than 20 per cent, Premier Inn's sales grew 13.4 per cent, thanks to opening of 23 new hotels within the last twelve months.

The group said trading in the first couple of months of its new fiscal year had started well and it hoped that it would be able to double Costa sales to £2 billion. It also hiked its full-year dividend to shareholders by 19.9 per cent to 68.80p per share.

Whitbread operates more than 2,800 Costa Coffee stores across the globe, including 1,755 in Britain and 326 in China.