World Cup woes adding to gloom at distributor
A Devastating profit warning wiped nearly £58m off the value of WH smith’s former newspaper distribution arm and led to the departure of two directors. in a gloomy trading update, Connect Group slashed profit expectations following a period of ‘extremely disappointing’ trading.
the distribution firm, created via a demerger from WH smith in 2006, was expected to make £42m45m profit this year but analysts now believe that figure could be £10m lower.
slow sales of World Cup-related products, such as sticker books, at its newspaper and magazine wholesaler, smiths news, contributed to the group’s poor performance. it was compounded by falling volumes and increased costs at its tuffnells parcel delivery service. the swindon-based company will also close its parcel collection service, Pass My Parcel, due to increased costs and underperformance.
investors were warned that, at the very least, the full-year dividend would be substantially reduced. Chief executive Mark Cashmore and finance boss david Bauernfeind stepped down following the update. the shares closed down 44.8pc, or 23.3p, at 28.7p.
the FTSE 100 was as good as flat, edging 0.1 point lower to 7703.71, while the FTSE 250 ended the day 0.04pc lower, or 8.77 points, at 21232.87.
Just Eat shares took a hammering after rival deliveroo announced plans to take a bigger piece of the takeaway pie by allowing restaurants that sign up to its app to use their own delivery drivers.
Previously it targeted independent restaurants and chains that did not have their own delivery staff. But now it will go after chip shops, kebab houses, curry restaurants and Chinese takeaways that have so far used Just eat to connect with customers. the announcement took a 4.7pc bite out of Just eat’s shares, which ended the day down 40p at 810p.
global miner Glencore settled a dispute with democratic Republic of Congo state miner gecamines, saving a key copper and cobalt joint venture.
glencore will effectively write off £4.2bn debt, but securing the asset is crucial as the dRC is by far the biggest supplier of cobalt, which is key for electric cars and mobile phones.
Analysts at Credit suisse said: ‘We see this deal as an overall positive for the company, albeit it is certainly not a win/win scenario for glencore, with some concessions having to be made to put this issue to bed.’ glencore shares ticked up 3.8pc, or 14.4p, to 398p.
On the Ftse 250, analysts at RBC Capital Markets jacked up car marketplace Auto Trader’s target price by 70p to 410p. the broker said: ‘Auto trader has a dominant position and attractive free cash flow generation.’
However, its target price is still short of Auto trader’s shares, which ended the day flat at 422.5p. shares in sweetener maker Tate
& Lyle turned sour after Jefferies downgraded the firm from ‘buy’ to ‘hold’. the broker raised concerns it would be affected by a renegotiation of the north American Free trade Agreement between the Us, Canada and Mexico. t&L makes high-fructose corn syrup sweeteners in the Us that are exported to Mexico for use in soft drinks. its shares slid 4pc, or 27p, to 643p.
On Aim, shares in British video game maker Team17 bolted upwards – rising 8.6pc, or 20p, to 252.5p – after it revealed Overcooked 2, a sequel to its popular game, will launch on August 7.
Fellow British tech firm Bango announced a deal allowing customers of entel, Chile’s largest telecommunications company, to buy apps and music on google Play and charge them to their phone bills. its shares bumped up 0.3pc, or 0.5p, to 151.5p.