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Whitbread Reports 14% Drop in Adjusted Profit Amid Challenging Market Conditions

Why we think this is bad

The hospitality giant faces significant headwinds, with adjusted profit before tax falling 14% to £483m. Despite revenue only dipping 1%, the company is grappling with softer market demand and an uncertain UK macroeconomic outlook. Margins are under pressure, with UK adjusted pre-tax margins declining from 21.2% to 18.8%. The increase in net debt from £298m to £483m is concerning, although partially offset by a strong cash position. While progress in Germany and a £250m share buy-back show some positives, the overall picture suggests challenges ahead in the core UK market.

Key Points

  • Adjusted profit before tax decreased 14% to £483m
  • Group statutory revenue down 1% to £2,922m
  • UK adjusted pre-tax margins reduced to 18.8% from 21.2%
  • Net debt increased to £483m from £298m last year
  • Excellent progress in Germany, with losses reduced and profitability expected in FY26
  • Announced £250m share buy-back program
  • Final dividend of 60.6p per share recommended, making 97.0p for the year
  • Softer market demand and uncertain UK macroeconomic outlook reported
  • Accelerating Growth Plan on track, with 1,075 new rooms opened in FY25
  • Targeting at least £300m incremental adjusted profit before tax by FY30

Summary

The hospitality leader reported a 14% drop in adjusted profit before tax, facing softer market demand and margin pressures. Despite challenges, it's progressing in Germany and announced a £250m share buy-back.

Whitbread PLC's preliminary results for FY25 reveal a challenging year with adjusted profit before tax down 14% to £483m. The company faced softer market demand, particularly in the UK, leading to a slight 1% decrease in group statutory revenue. UK adjusted pre-tax margins declined to 18.8% from 21.2%, indicating pressure on profitability. However, there were some positive developments, including excellent progress in Germany with reduced losses and expectations of profitability in FY26. The company maintains a strong balance sheet with £909m in cash, although net debt increased to £483m. Whitbread announced a £250m share buy-back, demonstrating confidence in its financial position despite the challenges. The outlook remains cautious, with the company noting an uncertain UK macroeconomic environment. Broker targets suggest a mixed view, with some maintaining 'Buy' recommendations while others have downgraded to 'Neutral'.

Key Dates

July 4, 2025
Final dividend payment date
Early 2026
Expected profitability in Germany operations
2030
Target to reach 98,000 open rooms in the UK and Ireland
ANNUAL RESULTS