Car crash at Pendragon after vehicle sales stall
INVESTORS slammed the brakes on Pendragon as the car retailer warned of a fall in demand for new cars.
Pendragon warned pre-tax profit for the year will now be around £60m – down from an expected £75m – as used car prices are hit by lower demand.
Profits dropped more than 20pc for both used and new cars sales over the past quarter.
Pendragon said it will be reviewing its brands to evaluate the appeal of each and will make no further acquisitions in the US.
Analysts at Berenberg dropped their ‘buy’ rating on the stock as Pendragon warned consumer confidence had waned and it expects the new car market to continue to decline. Chairman Mel Egglenton has stepped down with immediate effect for personal reasons, it was also announced. The 66-year-old has held the role since 2013 and said ‘we have achieved much in a challenging retail environment’.
Shares plunged 18.1pc, or 5.25p, to 23.75p – a four-year low – wiping £75m off the value of the company. The FTSE 100 edged up 1.2 points to finish the day at 7,524. Drugs giant GlaxoSmithKline revealed its shingles vaccine has been approved in the US.
Clinical trials of Shingrix, which aims to prevent the condition in those aged 50 and over, showed a 90pc efficacy rate.
Shingles, which is caused by the same virus that causes chickenpox, is estimated to affect one in three people in the US. Shares were off 0.2pc, or 4p, to 1,519.5p.
Rival pharma giant AstraZeneca also announced an FDA approval. Its treatment for type-two diabetes aims to keep insulin levels under consistent control, and has also been shown to help weight loss in patients. Astra also announced a potential treatment option for patients with breast cancer in Japan. The business, together with Merck, has submitted a drug application to Japan’s regulator and a decision is expected in the second half of 2018. Shares dipped 0.4pc, or 22p, to 5140p. A profit warning from Real Good
Food left a bad taste in investors’ mouths. It’s the third alert from the ingredients group, which scrapped its earning guidance and warned this year would see a pre-tax loss.
The firm said sales growth had been encouraging – up 13pc from a year ago – but it was not translating into greater profitability.
RGF blamed its issues on everything from currency movements and rising costs (most notably butter) to increased fees from corporate advisers and disruption to its output.
Russ Mould, investment director at AJ Bell, said: ‘The firm is already taking decisive action by moving the company’s headquar- ters from London to Liverpool to cut costs. But there is a nagging doubt about the firm’s competitive position. A squeeze on profits from rising prices, especially butter, does raise the question of whether Real Good Food is strong enough.’ Shares in RGF dropped 15.4pc, or 4p, to 22p. Braemar Shipping Services shares sank even as it promised profits would improve. Revenue in the six months to August 31 was £66.6m, down from £70.2m a year ago, and underlying profit fell to £2.3m, from £2.8m.
The firm said cost-saving measures and a solid pipeline of business would see a continued recovery. Chairman David Moorhouse said the company was well placed to deliver a stronger performance in the second half of the year. Shares fell 2.5pc, or 7.62p, to 295p.
Building materials firm CRH has received shareholder approval for its £2.6bn purchase of Ash Grove. CRH will buy the US cement manufacturer subject to regulatory approval. Shares in CRH gained 1pc, or 28p, to 2,818p.