Profit warnings take centre stage as three Main Market stocks disappoint investors with bad news about trading.
Pearson (PSON) says life is even worse than previously expected in the North American higher education market. Its dividend will be cut, although the FTSE 100 media group says it may issue a special dividend if it can sell its 47% stake in Penguin Random House. The market is shocked and the shares slump 23%.
Mitie (MTO) has issued its third profit warning since September 2016 after suffering contract delays and an underperforming cleaning division. Finance director Suzanne Baxter is being replaced by former Balfour Beatty (BBY) numbers man Sandip Mahajan. Liberum slashes Mitie’s earnings per share forecasts by 49% for 2017 and by 31% for 2018.
Trading profit has turned out to be 10% lower than expected for Premier Foods (PFD). It blames weak sales and a struggle to deal with high input costs through tweaking promotions and charging customers more for its products.
Shares in both Mitie and Premier Foods fall by 15% on their respective profit warnings.
The bid war for aerial platform provider Lavendon (LVD) soldiers on. Loxam has increased its bid once again and is now offering 270p per share. Lavendon’s shares have jumped to 275p which implies the market is expecting the other suitor, TVH, to also raise its bid.
Fashion specialist Burberry (BRBY) rises 1.8% to £16.22 after reporting a decent three months to 31 December 2016. Retail revenue was up 4% to £735m on an underlying basis which excludes the effects of currency movements. The reported figure actually shows 22% growth when translating overseas earnings back into sterling.
Investors breathe a sigh of relief that Ladbrokes Coral (LCL) has managed to hit full year operating profit expectations despite a rubbish December for sporting results. Its shares advance 2.8% to 128p.
British construction and property development firm Henry Boot (BHY) rises 3.4% to 205p after saying 2016 pre-tax profit will be slightly ahead of market expectations. It says December was busy on the completions front and it recognised more profit than expected on a conference centre project in Scotland.
It doesn’t look like Central Asia Metals (CAML:AIM) will develop the Copper Bay metals project in Chile, despite extensive studies on the asset over the past few years. It says work is now on hold given an uncertain outlook for the copper price.
However, it seems clear from a newly-published study that the asset isn’t economically sound enough to warrant bringing into production. It will cost $88.5m to build, but the net present value is only $34.1m.
Shares in Fitbug (FITB:AIM) increase by a third to 0.22p as the fitness tracking device firm signs a one-year deal with an undisclosed Asian financial services group which has 14,000 employees.
The lithium bug continues to spread across the AIM market with Blenheim Natural Resources (BNR:AIM) the latest contender for the throne. Its shares rise by 26.5% to 0.53p after being granted an option to buy a 30% stake in a lithium exploration project.
Conference call specialist LoopUp (LOOP:AIM) says trading is ahead of market expectations, helped by winning contracts in the legal and finance sectors. Get your free tickets to our forthcoming investor even on 31 January in London where LoopUp will be giving a presentation alongside other small cap firms.
