Profit fears wipe £252m from packaging maker
Packaging firm RPC Group suffered its worst day in four years after a stellar set of results failed to convince investors of the company’s health.
The firm, which makes packaging for products ranging from food to car parts, revealed a 67pc jump in revenues for the year ended March 31, to £2.7bn.
it also reported a 55pc increase in profit to £308.2m and a full-year dividend of 24p, up 50pc on the previous year. But this didn’t stop £255.2m being wiped from the firm’s value.
nicholas Hyett, equity analyst at Hargreaves Lansdown, said investors are worried the firm is using acquisition costs – it has bought nine firms just in its last year – to conceal poor performance.
Likewise, Russ Mould, investment director at aJ Bell, said seasoned investors will be put off by several red flags. He said: ‘Warning signs include multiple acquisitions, frequent restatement of earnings figures and triggers for management bonuses.’ not everyone thought that – broker Panmure gordon praised RPc’s results and gave it a ‘Buy’ rating.
RPc shares fell 7.2pc, or 61.5p, to 788.5p, sending it towards the bottom end of the FTSE 350. But it was online supermarket
Ocado which took the mid cap index’s bottom spot.
a dreadful week for the grocer continued, with shares falling another 7.9pc, or 24.4p, to 284p.
its decline began on Monday, when investors criticised it for refusing to give the name or value of its first overseas deal.
Matters worsened a day later when British hedge fund crystal amber announced that it had put aside a £100m fighting fund in a bid to overhaul the company.
The FTSE 100 continued to drift further from record highs hit last week, closing down 0.62pc, or 46.33 points, to 7478.62. The index fell as the pound strengthened in afternoon trading, with investors believing the Tories will win a majority in today’s general election.
Housebuilders were some of the strongest performers after mortgage lender Halifax said house prices rose 3.3pc year-on-year in May, despite a 0.2pc fall over the last quarter. Taylor Wimpey was up 1.6pc, or 2.8p, to 181.8p, while Persimmon rose 2.1pc, or 48p, to 2393p, and Barratt Developments rose 0.8pc, or 4.5p, to 584.5p.
Drug maker AstraZeneca fell after selling the rights to its migraine treatment drug to grunenthal – the company responsible for helping to develop the thalidomide morning sickness pill in the 1960s – for £233m. Shares fell 1pc, or 53p, to 5302p. Losses were also seen at sugar giant Tate &
Lyle, which was cut by analysts at Jefferies, who downgraded the stock to ‘ Hold’ from ‘ Buy’ and slashed its target price to 800p from 870p.
it said that the firm was likely to be soured by weak prices next year, and shares slipped 2.6pc, or 19.5p, to 734.5p.
Elsewhere, a decline in oil prices despite news of production cuts at Opec, the world’s main oil cartel, sent Tullow Oil into the red. Even a glowing review from analysts at Barclays couldn’t push the africa-focused exploration firm into positive territory. Shares fell 0.2pc, or 0.4p, to 170.6p. Building regeneration firm
St Modwen Properties, on the other hand, led FTSE 350 gains by a country mile.
The company, which manages more than 100 developments, committed to accelerating commercial development activity. it said it has continued to perform in line with expectations. Shares rose 6.3pc, or 20.8p, to 353p.