Whitbread plc (LON:WTB) shares tumbled despite it continuing to grow market share in both Costa and Premier Inn and reporting a 5.4% rise in underlying pre-tax profit in its latest half year.
In a report, which failed to inspire the market, the group conceded there was uncertainty in the UK's economic outlook and said it would continue to monitor risks as a result of the Brexit decision, but said it expected to deliver full year numbers to March 30, 2017 in line with expectations.
In addition, Costa Coffee's underlying operating profit fell 4% to £64.6 million due to increased investments in the first half, including from the introduction of the living wage.
The firm said strong organic expansion, combined with like-for- like sales growth of 1.9% drove group sales up 8.1% to £1.6bn compared to £1.4bn in the same period last year.
Underlying profit before tax rose by 5.4% to £307mln (£291mln), beating analysts' expectations for £303mln, while the underlying basic earnings per share (EPS) increased by 5.2% to 133.88 pence. The core brands of Premier and Costa saw total sales growing 8.9% and 10.7% and like-for-like sales up 2.4% and 2.3% respectively.
But Costa Coffee's underlying operating profit decreased 4% to £64.6 million due to increased investments in the first half.
For Premier, regional like-for-like revpar (revenue per available room) was up 1.1% with extensions (six new hotels opened) diluting underlying revpar by around 1.7%.
The firm continues to grow market share in London, it said, with sales growth of 4.7% and rooms available increasing by 12.1% with a high occupancy rate of 86.8%.
The Premier restaurants business outperformed a soft pub restaurant market, it said, with total sales growth of 1.5% and like for like sales growth of 0.3%.
In Germany, the group opened the first hotel in Frankfurt in February this year and has had good feedback.
It is looking to spend £60-100 million per year over the next three years to create more hotels in the country.
Shares eased 2.89% in early deals to 3,731p