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WH Smith ups divi 10% as travel gains dampened by high street
Retailer WH Smith upped its interim dividend payout 10% after first half profits dipped 1% as growth from the travel-focused arm was offset by the continued decline of the high street business.
The FTSE 250 group reported a good start to the second half and a strong period for tender wins in international airports.
Revenue in the six months to 28 February was entirely flat at £643m, as travel turnover rose 7% or 3% on a like-for-like basis and the high street saw sales shrink 5% or 4% LFL, both as they had been in January's first-quarter update.
Profit before tax of £82m was down from £83m in the first half last year as travel trading profit, which excludes central group costs, increased 5% to £41m but fell 6% to £50m on the high street.
High street profits fell despite cost savings of £7m helping boost gross margins by 0.8 percentage points.
The travel business was driven by continued investment in the UK and international businesses and ongoing growth in passenger numbers, with a presence in 48 airports across 27 countries.
Diluted earnings per share of 60.9p were down 1% but both businesses are cash generative, with group free cash flow of £39m in the period. So, as well as the £50m added to the rolling share buyback scheme and the investment made in the business, directors declared an interim dividend of 16.0p per share, a 10% increase on last year.
Chief executive Stephen Clarke felt it was "another good first half performance" and pointed out that the high street business was not able to benefit from the similar publishing trend to match last year's strong sales of humour books over Christmas, but that stationery performed particularly well.
"We have also had a record period for tender wins internationally, with 26 new units won since the start of the year, including eight units in Madrid Airport and our first seven units in South America in Rio de Janeiro. We are now present in 48 airports across 27 countries," he said.
"While there is some uncertainty in the broader economic environment, we have made a good start to the second half of the financial year, increased the interim dividend by 10% and are confident in the outcome for the full year."