Whitbread profits rise 20% despite slowing sales at Costa coffee chain

Whitbread has posted a 20% increase in interim profits on the back of strong growth in the Premier Inn hotel chain.

Profit before tax came in at £316m ($417m) for the six months to 31 August, up from £264m in the same period a year earlier.

Whitbread attributed the increase to "disciplined cost management" and growth at Premier Inn offsetting falling profits at the Costa coffee chain.

Costa's profits fell nearly 10% year-on-year to £59m, with the company blaming "significant" increases in labour costs, business rates and higher prices of coffee imports.

Like-for-like sales at the UK's largest coffee chain increased 0.6% during the half-year period, down from the 2.3% growth recorded a year ago.

However, Whitbread said the more than 2,300 Costa stores across the UK are poised for strong growth as consumers become more willing to spend more per cup for higher quality and innovative drinks.

"We have significant structural growth opportunities, in the UK and internationally, and confidence in our plans to capitalise on these opportunities," the company said in a statement.

"Despite the well known short-term economic uncertainty, our performance in the first half was good and we expect to meet expectations for the full year."

Whitbread's revenue rose 7.4% to £1.67bn in the six months to 31 August. Its share price opened more than 4% lower in London.