Rolls-Royce falls 4pc as it warns over cash flow
Investors dumped shares in engineer Rolls- Royce amid reported doubts over cash-flow targets ahead of its results today.
the firm has climbed nearly 40pc since the end of last year amid hopes it would hit £1bn cash flow by 2020.
But executives are concerned the market is ignoring key challenges, and are reported to have told investors cash flow depends on key success including doubling engine production. shares slid 4.4pc, or 41p, to 888p, ahead of half-year results today.
tobacco shares also continued to fall after the Us Food and Drug Administration’s announcement on Friday that it wanted to stop cigarettes from being addictive. British American Tobacco, which has only just bought American firm reynolds, has been working on e-cigarettes and insisted it was encouraged by the FDA’s announcement. But the sell- off continued, with Bat shares falling 5pc, or 246.5, to 4713.5. Imperial Brands also fell 5.9pc, or 195.5p, to 3120p. neil Wilson, senior analyst at ETX Capital, said: ‘I don’t think anyone knows what it the plan could mean fundamentally, but clearly it’s bad news for them, and people have decided it’s definitely bad news, or at least it’s worth getting out and being a bit more cautious.’
the pound hit a 10-month high of $1.32 as investors speculated about an interest rate hike this thursday and the dollar headed for its worst month since January. nonetheless, the FTSE 100 closed 0.05pc or 3.6 points up at 7,372 points.
Helping it rise was a rally in mining stocks amid signs of increased demand for iron ore in China.
the country’s purchasing manager’s index for the steel sector rose to 54.9 in July, the fastest pace since April 2014, while domestic production is being disrupted by environmental inspections. Goldman sachs raised its price target to $70 from $55 per tonne. It helped Anglo-American (up 1.7pc or 20.5p to 1252p), Glencore (up 0.9pc or 2.9p to 334.15p) and Ferrexpo, (up 2.6pc or 6.1p to 238.4p).
But the top gainers on the Ftse 100 were water companies
Severn Trent (up 4.1pc or 88p to 2240p) and United Utilities (up 3pc or 26p to 897.5p), after RBC Capital Markets upgraded the duo along with Pennon to ‘outperform’. Analysts said the three were in sync with water regulator ofwat’s agenda and would therefore not be too badly hit by a tough price review. they added: ‘We believe ofwat doesn’t have an agenda to dry-out investor profits. Instead it attempts to weed out companies whose inefficiencies and profit-taking hurt customer interests.’ Pennon rose 1.7pc or 13.5p to 805p. Professional services provider
FDM Group only joined the Ftse 250 in June but was top of the leader board yesterday. Investors cheered as it announced a 35pc rise in profit to £22.2m, driven by soaring revenues in north America (up 56pc) and Asia Pacific (up 36pc). Bosses hiked its interim dividend by 29pc to 12p. shares soared 15.6pc or 124.5p to 919.5p.
Fellow Ftse 250 financial services group Fidessa also climbed as it announced a 14pc boost in profit to £25.4m, driven by the fall in the pound. Bosses increased its interim dividend by 7pc to 15.3p and said the year ahead looked good. It was up 0.3pc or 7p to 2264p.
At the other end of the market, energy and water switching firm
Utilitywise crashed down AIM as it warned revenue for the year ending July 31 would be up to £4.5m below previous expectations due to a slump in renewals.
the firm is also switching to the new IFRS 15 accounting standard, which will mean they have to recognise payments from energy suppliers when the contract starts, not when it is signed. shares slumped 19pc or 11.12p to 48p.