The hotels and leisure giant Whitbread has reported a 7.6% rise in pre-tax profits to �213.4m for the year to March 2002.

"The outlook for our markets is positive with growth expected in the UK economy and consumer confidence remaining high," said chairman Sir John Banham.

Whitbread's restaurants, such as Pizza Hut and Brewers Fayre, and its gyms boosted profits.

"The continuing restaurant operations are now returning good levels of profit and are ahead of their 10% earnings growth target," said chief executive David Thomas.

"There is no question that they will stay as an important part of the group's overall operations."

Strong restaurant sales compensated for the fairly weak performance of its hotels in the wake of 11 September.

Board confidence

However, despite the downturn in tourism, Whitbread said its hotels performed better than their peers.

Whitbread has pulled out of brewing, pubs and bars to focus on areas where it expects growth to be strong.

"The board is confident that the transformed Whitbread will build on the success already achieved and will continue to make good progress towards the achievement of our ambitious financial goals," said Sir John.

"The new financial year has got off to a promising start.

"(Hotel chain) Marriott is still experiencing softness in London although yield has been sustained ahead of the market.

"Our other major brands continue in like-for-like sales growth ahead of the 5% target," the group said in a results statement.

Whitbread shares closed 5p down on the day at 675p, off earlier highs of 685.5p.