Shares in Whitbread (LON:WTB) have fallen deep into the red in London this morning as the Premier Inn owner warned of ‘acute’ political and economic uncertainty in the UK. The update came as the company revealed a slump in its annual profits following the sale of its Costa Coffee business to The Coca Cola Company which wrapped up earlier this year.
As of 10:38 BST, Whitbread’s share price had given up 3.89 percent to 4,569.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.21 percent lower at 7,425.10 points. The group’s shares have added just under seven percent to their value over the past year, as compared with about a one-percent drop in the Footsie.
Whitbread posts FY results
Whitbread announced in a statement this morning that its revenue from continuing operations had increased 2.1 percent to £2.05 billion, from capacity additions. The group’s statutory profit before tax, however, slumped by 39.1 percent to £260 million driven by £178 million of non-underlying items, primarily relating to disposal costs from the Costa sale.
“In the fourth quarter, we saw a decline in business and leisure confidence, leading to weaker domestic hotel demand,” the company’s chief executive Alison Brittain commented in the statement, adding that the weakness had “increased into March and April particularly in the regional business market, coinciding with an acute period of political and economic uncertainty in the UK”.
“At this stage in the new financial year it is too early to know how business confidence and its impact on the market will evolve,” she pointed out.
Analysts weigh in on update
City A.M. quoted Laith Khalaf, senior analyst at Hargreaves Lansdown, as commenting that the Premier Inn was facing ‘an uphill battle’ for growth.
“Like the UK, the German economy isn’t firing on all cylinders right now, but cyclical swings are outside the control of Whitbread, and are simply part and parcel of the hotel business,” the analyst pointed out.