Convatec shares fall back to earth as rising costs cause concern

MEDICAL supplier

Convatec missed out on a buoyant market to record its worst day of trading since listing, its earnings wounded by rising costs and stuttering production.

Paul Moraviec, the wound dressing and catheter maker’s chief executive, told investors that relocating production lines delayed the manufacture of certain products and fulfilment of some orders, suppressing growth in its advanced wound care unit, its largest division, by 2pc.

Broker Numis said that the adjusted earnings before interest and tax of $193m (£147m) were disappointing and well below the consensus of $207m.

Its flotation in October was the biggest in London last year, valuing the company at £4.4bn, but its shares’ meteoric rise since listing came to a halt yesterday, falling as much as 10pc in intraday trading.

Despite leaving guidance for the year in check, Convatec closed down 6.4pc, or 19.7p, at 289.3p.

Elsewhere, cigarette heavyweight British American Tobacco

recovered a further 150p to £50.04 after JP Morgan reinitiated the tobacco giant with an “overweight” rating.

The tobacco giant’s shares shed over 12pc in a matter of days after the US regulator announced last Friday that it wanted to reduce nicotine in cigarettes to nonaddictive levels, but the broker said a change in market trends was unlikely before 2020.

Analyst Alberto Lopez Rueda told clients that even if the FDA managed to push through significant tightening of regulation, the moderate taxation and highly affordable market stateside were considerable upsides for the company given its recent acquisition of Reynolds, the country’s second-largest tobacco producer. Peer Imperial

Brands advanced 100.5p to £33.05, the two companies’ heavy weighting lifting the FTSE 100 index by 17 points.

Revived by the pound’s slump following the Bank of England’s decision to hold interest rates and downgrade its growth forecasts, the FTSE 100 pared early losses to close up 63.34 points at 7,474.77.

Retailer Next rallied 388p to £44.01 as investors piled in on a sales boost from a warmer June and July, while London Stock Exchange Group pushed 111p higher to £38.80 after it reported a 18pc rise in revenues and lifted its interim dividend by 20pc.

Meanwhile, on the FTSE 250, better than expected second-quarter revenues at satellite operator Inmarsat were eclipsed by a fall in sales at its maritime business, sending its shares down 29p to 759p. Jefferies argued that the market reaction was “testament to the thrall” that the “minutiae” of the maritime division now had over sentiment.