Diving SIG spooks housing firms as recession talk grows
A HORRIBLE profit warning from building supplier SIG spooked investors across the market today as talk about a recession mounted on London’s trading desks.
Data over the past six months shows construction markets in Germany and the UK have deteriorated at a rapid pace. Nevertheless the extent of SIG’s decline caught investors by surprise.
The company said profits across its core divisions would come in well below 2018 levels, adding that “trading conditions have accelerated over recent weeks, and political and macroeconomic uncertainty has continued to increase”.
So bad has it got for SIG that the company has been forced to flog two businesses to shore up its finances.
It has sold its air handling division to France Air Management for £200 million, with £130 million to be used to reduce debt. It has also offloaded its building materials arm to Kingspan for £37.5 million.
The warning sent SIG’s shares down by 17%, or 20.5p, to 99p and spooked the rest of the market with B&Q owner Kingfisher off 3.8p to 188p, while Howdens Joinery slumped 25p to 530p and Travis Perkins lost 37.5p to 1213.5p.
Housebuilders also were knocked and Persimmon fell 27p to 2069p, while Barratt shed 8.5p to 616p. The FTSE 100 was down 7.18 points to 7148.20. The risers were few, although London Stock Exchange added 6p to 7388p.
The Hong Kong stock exchange has until Wednesday to come up with a better offer for the LSE and rumours are that the group is willing to up its bid significantly.
Further down the league table GVC’s shares were in the red, off 5.8p to 754p, despite analysts at Peel Hunt saying the gambling firm should put in a rival bid for Canadian rival The Stars Group.
Last week Paddy Power and Betfair owner Flutter agreed to buy Stars in a £9.3 billion deal aimed at creating the world’s biggest betting firm. But Peel Hunt believes GVC has a much better track record of complex M&A — it has bought Ladbrokes, Coral, bwin and Party-Gaming in recent years — and so should step up and make a counterbid.
Pawnbroker Ramsdens moved higher after it said it would book a one-off £600,000 gain in the first half after it decided to scrap some jewellery to take advantage of a higher gold price.
The company also said it had continued to trade “well” in the six months through September, with profits in line with its expectations.
The shares added 2.5p to 196p.