FTSE 100 at the close: Barratt Developments, Whitbread

By Michael Morton
18th October 2023

Related topics: Barratt Developments [LON:BDEV], Whitbread [LON:WTB], Tickmill

FTSE 100 at the close: Barratt Developments, Whitbread

By Patrick Munnelly, Market Strategist, Tickmill

On Wednesday, UK shares experienced a decline, with the FTSE 100 index dropping by over 1.1%. The losses in the market were partly offset by gains in energy and precious metal mining stocks.

The trigger for this market movement was the release of consumer inflation data that exceeded expectations for the month of September. This unexpected surge in annual consumer price inflation raised concerns about the potential for the Bank of England to implement further monetary tightening measures.

Specifically, the data indicated that British annual consumer price inflation was hotter than anticipated. Additionally, core inflation, which excludes volatile items like food and energy, also fell by a smaller margin than expected.

These factors contributed to worries of another interest rate hike by the central bank as a measure to control inflation and maintain economic stability.

Barratt Developments uncertain outlook

On the negative side of the ledger and sitting close to the bottom of the FTSE 100 is Barratt Developments LON:BDEV. The largest homebuilder in the UK saw shares down 4.14% at the close.

The company has chosen not to offer a full-year profit forecast, citing an “uncertain” outlook, primarily due to challenges in the mortgage market. The CEO, David Thomas, has highlighted that the trading environment remains tough, and potential homebuyers continue to grapple with difficulties in obtaining mortgages.

Despite these uncertainties, Barratt reaffirms its commitment to its annual home construction target, aiming to build between 13,250 and 14,250 homes in the current year.

The stock had shown a 6.8% increase year-to-date as of the last close, indicating that despite the challenging conditions, there had been some positive performance over the year.

Whitbread beats expectations

On the opposite end of the table is Whitbread LON:WTB. The owner of Premier Inn is leading the way on the FTSE index, with its shares surging by 1.3% to sit at 3,366p by the close.

The company has announced a share buyback plan worth £300 million ($365.79 million), which has likely contributed to the positive market sentiment.

Whitbread also revealed impressive financial results for the first half of the year, with a 44% increase in profits. This growth can be attributed to robust demand and strong consumer spending in its pubs and restaurants.

Additionally, the company has revised its full-year capital expenditure (Capex) forecast to a range of £500 million to £550 million, up from the previous guidance of £400 million to £450 million.

Market analysts, such as Jefferies, note that Whitbread’s adjusted pre-tax profit beats consensus expectations by 14.5%. The company’s shares have seen remarkable growth this year, with an increase of approximately 30% year-to-date as of the last close