Growth jitters send Smiths Group tumbling as retail recovers
INVESTORS dumped shares in industrial conglomerate Smiths
Group on worries that it will not hit its growth targets after downbeat interim results yesterday.
The FTSE 100 company – which makes devices from airport security scanners and medical equipment to electrical connectors and hoses – said in the six months to the end of January underlying revenues were flat at £1.5bn.
However, on a statutory measure they slipped 4pc, a decline attributed to foreign currency movements and a £126m boost from disposals last time round.
Headline pre-tax profit was 12pc lower at £217m, but crashed 42pc on a statutory basis to £199m.
The numbers caused alarm in the markets, with the shares dropping more than 10pc at one point – their largest fall in almost a decade – before recovering some lost ground later in the day. The stock closed 67.5p, or 4.3pc, down at £14.69, making it the biggest faller on the FTSE 100.
Despite the declines on statutory measures Andrew Reynolds Smith, chief executive, called the first half “encouraging” as the company focused on a restructuring designed to make it more sustainable, with a fresh focus on the research and development of new products.
Elsewhere, the British high street enjoyed a boost with retailers’ shares rising across the board.
Next led the FTSE 100 gainers for most of the day despite reporting a fall in pre-tax profit for the year, climbing 355p to £49.84. A brighter outlook for this year meant investors were keen to buy, despite the figures. Meanwhile, Marks &
Spencer jumped 3.1p to 268.4p on the back of an announcement earlier in the week that supermarket industry veteran Stuart Machin would be joining to head up its food division.
His appointment suggests that boss Steve Rowe’s shake-up of the senior management team is almost complete, boosting investor confidence.
Solid retail trading figures for February, which were released on Thursday, boosted the sector into the end of the week with Pets At Home, Dunelm, Superdry, JD Sports and Dixons Carphone among the FTSE 250’s top climbers yesterday. The Office for National Statistics said retail sales volumes were up by 0.8pc last month – the first increase in sales in three months. Ted Baker recovered some of its losses after reporting challenging trading conditions on Thursday, finishing the day 98p higher at £26.54.
Shares in pharmaceutical company Indivior fell by as much as 24pc after it lost a second legal case in recent months in its battle to protect the patent of its opioid addiction treatment Suboxone Film, a drug which generates 80pc of its revenues. The company finished the day 25.5p, or 6.2pc, lower at 382.8p. Overall, the FTSE 100 finished the week more than 242 points lower than its opening price on Monday at 6,921.94, while the FTSE 250 lost 485 points to finish at 19,319.48.