Shares in Whitbread Plc, the owner of the Costa coffee chain, saw its shares decline on the FTSE 100 in afternoon trading despite the group reporting a rise in profits in the half year ended 30 August 2012.
Group revenue rose 14.2 per cent to over a billion pounds in the period, while underlying pre-tax profit increased 10.6 per cent on the previous year to £193.4 million.
Whitbread's Costa chain opened 141 net new branches in the period and saw underlying pre-tax profit jump 29.9 per cent to £36.1 million, while the group's hotels and restaurants business reported a rise in profits of 8.5 per cent to £181.3 million.
Net debt at the group was up slightly from £520.1 million a year ago to £525.8 million.
The group said it would be increasing its interim dividend by 11.4 per cent to 19.50 pence per share and that during the half year period it had created 1,500 new jobs in Britain.
Anthony Habgood, Chairman of Whitbread, said, "Whitbread is continuing on its rapid profitable organic growth path in difficult economic conditions. This is due to our unrelenting customer focus and the use of our strong balance sheet to invest in building powerful brands, developing our people and renewing our estate."
Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, commented, "In a week of disappointing earnings on both sides of the pond, Whitbread is flying the flag as an example of an established company showing growth stock characteristics.
"Most of the boost comes from the twin growth engines of Costa and Premier Inn, where the Olympics provided a tangible benefit for the latter. With international opportunities providing further room for manoeuvre, the company has been able to reinvest in the business and also maintain its progressive dividend policy. An element of caution comes in the form of a net debt figure which edged higher and a rather more conservative outlook for the second half.
"However, by tapping into the consumer zeitgeist, Whitbread continues to appeal to the cash strapped consumer and the shares have reacted accordingly, having risen 39% over the last year as compared to a 7% hike in the wider FTSE100. The share price reaction in early trade may well contain an element of profit taking, and with the market consensus recently having nudged up to a cautious buy, the price may be up with events for now."
By 13:10 shares in Whitbread were down 1.16 per cent on the FTSE 100 to 2,296.00 pence per share.
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