Bad power cut at Premier Farnell
ACTIVIST investor GO Investment Partners is expected to increase the pressure on the Premier Farnell board to undergo an aggressive restructuring or merge with rival Electrocomponents.
Shares in electronics distributor Premier crashed 26.6p or 16pc to a five-year low of 140p on yet another profits warning.
GO recently increased its stake in the FTSE 250 company from 3.24pc to 4.11pc after first declaring a shareholding in May.
Premier warned that profits for the first half of 2015 would be a 10th below expectations as group sales per day had slowed significantly, particularly in its North American and UK markets, since its first quarter update in June. Group sales growth per day in the second quarter was now expected to be 1.2pc against the 5.4pc achieved in the first quarter.
Laurence Bain, chief executive, said that despite a number of initiatives to drive sales and expand profit margins, the company had been hit by a slowdown and a tougher trading environment. ‘We now expect adjusted operating profits in the second half to be at similar levels to those in the first half’, he said.
Peel Hunt’s analyst Henry Carver is of the opinion that a marriage with Electrocomponents (down 2.8p at 205.8p) may be the best solution if Premier can achieve it with minimum disruption.
Bumper earnings figures from some highprofile constituents helped the Footsie climb a further 75.72 points to 6631 and the FTSE 250 up 124.92 points to 17,512.81.
The early highlight was Barclays, 5p dearer at 284.6p, after the banking giant posted an impressive £3.14bn pre-tax profit for the first half of the year, up 25pc on 2014. News that it took a further big hit for mis-selling PPI and other customer compensation was ignored.
Later, drugs giant GlaxoSmithKline advanced 46p to 1374.5p after posting robust second-quarter sales of £5.9bn and confirming it is on track to achieve guidance for this year. New product momentum accelerated across all three businesses and the group is confident about the outlook for next year.
Wall Street followed Tuesday’s gain of 189 points with a further rise of 121.12 points as dealers digested a statement from the Federal Reserve that it would keep US rates at their historic low for at least another two months.
Generic drugs maker Hikma Pharmaceuticals rose 86p more for a two-day rise of 327p at 2407p as buyers continued to applaud its £1.7bn acquisition of Roxane Laboratories, the US generic drugs arm of Germany’s Boehringer Ingelheim, making it the sixth-largest firm by revenue in the US generics market.
Contract caterer Compass, 58p down at 1028p, gave shareholders indigestion after reporting a mixed third- quarter trading update with overall group revenue up by 5.1pc, slightly lower than the previous quarter. Lower volumes and margins in the group’s oil, gas and mining client base because of lower commodities prices led to a 10 basis points decline in overall group margins for the quarter.
Mouth-watering interims lifted Greggs 101p to a record 1285p. First-half profits jumped a better-than-expected 52pc to £25.6m on 6.45pc sales growth. Chief executive Roger Whiteside said he expected profits for the full-year to exceed analysts’ consensus forecasts, which stood at £67m before the update. Greggs announced a £20m special dividend in April and said yesterday it would pay an ordinary interim dividend of 7.4p, up from 6p last time.
Hedge fund Man Group jumped 11.4p to 162.4p in response to better-than-expected interim results. First-half profits rose 54pc to £ 104m and funds under management improved 8pc to £50.5bn.
Caretech, the provider of specialist social care services in the UK, rose 7.5p to 246.5p. It is buying Spark of Genius for £7.5m. It operates nine residential care and education services homes in Scotland with a total of 48 places, alongside 100 education places across three schools. Existing banking facilities, which were due to expire in January 2017, have been extended by two years to 2019. Broker WH Ireland lifted its target price to 345p from 330p.
The cold and flu outbreak in the UK earlier this year took its toll. Dignity, the UK’s biggest undertaker, conducted 39,500 funerals in the 26 weeks to June 26 – up from 33,800 a year earlier – as the overall number of deaths rose more than 13pc to 317,000. It lifted group pre-tax profits 44pc to £46.5m. Shares closed 66p higher at 2436p.
Small buyers chased Deltex Medical 0.25p higher to 6.12p after hearing the company has received approval from the US Food & Drug Aministration for the release of its paediatric probes for use with its CardioQ-QDM+ monitors. The business’s chief executive Ewan Phillips said that FDA approval ‘is excellent news for paediatricians in the USA who have, to date, had no safe or easy system to monitor sick children’s’ haemodynamics.’
In-line third-quarter figures helped Brewin Dolphin improve 3.8p to 311.1p. ÷ DEUTSCHE Bank is a seller of Standard Chartered, 11.6p up at 982.2p, ahead of Wednesday’s interim figures. It will be the new chief executive Bill Winters’ first set of results. He recently outlined a new organisational structure, with eight regions under which the group reports consolidated to four regional businesses. The broker expects revenues to fall to £2.716bn in the second-quarter from £2.817bn in first.