Derek Pain: 'Whitbread hospitable despite a change in the penthouse suite'

When a successful chief executive decides to seek pastures new, it invariably prompts a degree of apprehension in the stock market. So the signalled departure of Andy Harrison from the Whitbread hospitality giant has tended to blow some of the froth off an outstanding set of figures.

Mr Harrison, a former easyJet chief, plans to take on non-executive roles. The first is chairman of Dunelm, a homewares chain. He joined the Premier Inn, Costa Coffee and Beefeater pub/restaurant group in 2010. In his five years, pre-tax profits have rocketed from £208m to £463.8m and the shares have climbed from around 1,200p to recently nudge 5,500p. The No Pain, No Gain portfolio enlisted the group in July, 2008 at 1,105p a pop.

Following in the Harrison footsteps will be demanding. Yet Whitbread has recruited a succession of top executives who have collectively abandoned the group's more than 250-year brewing heritage, dropped wines and spirits and sold most of its pubs. They have instead embraced Costa Coffee and Premier Inn.

Resources have been pumped into Costa and Premier, undoubtedly the driving forces of the group's success. In 2010 Mr Harrison succeeded Alan Parker and there is no reason to believe he will not be replaced by another inspirational executive.

Mr Harrison intends to remain at the helm for another year, so chairman Richard Baker is in no great rush to fill the looming vacancy. Indeed he may look in-house. Former finance director Christopher Rogers, now in charge of the Costa operation, could be a frontrunner. Current finance director Nicholas Cadbury is another possibility. There are also a number of candidates among former Whitbread men plying their trade with other companies.

Certainly there is no hint of any slowdown in Whitbread's expansion. The five-year plan announced in 2013 still stands, but has been extended. By 2020 the group hopes to have increased its Premier Inn stock by 25,000 rooms and lifted Costa turnover to £2.5bn. And the group is growing on the international front. Premier is trialling a German hotel and could have eight there by 2020; it already has representations in the Middle East and Asia, including India. Costa, too, is growing overseas, particularly in China.

Whitbread has detractors among City analysts who follow the group. Ahead of the figures, one such scribbler was saying sell with a 4,250p target price. True, the shares are highly rated, giving little room for error. But progress should continue and current-year indications suggest profits will grow to around £550m.

There is also the possibility the group will do the splits by floating either Premier Inn or Costa. If Whitbread did make such a move, it could significantly benefit the shares – as two, rather than one, successful operations could have a greater combined value.

Although Whitbread has a near £10bn capitalisation, it is not the biggest company in the portfolio. That distinction belongs to Lloyds Banking Group. It has produced first-quarter underlying profits of £2.2bn, but various charges reduced the statutory figure to £1.2bn, an 11 per cent fall.

Still, the shares, which have been a disappointment since being recruited to the portfolio – although recording a modest profit – are described by one analyst, Augustin Eden of Accendo Markets, as possibly "the bargain of the decade".

yourmoney@independent.co.uk