Engineer’s shares plunge 20pc on turnaround fears
AMEC Foster Wheeler was the FTSE’s biggest casualty as it revealed the extent of work needed to turn the business around.
The engineering firm said an extra £100m of cost cuts will be made but fuelled concerns about its turnaround by scrapping next month’s capital markets day.
The investor event was planned for mid-November, but Amec yesterday revealed it had been pushed back to March as a result of the ‘wide-ranging review’.
Since June it has been working to cut costs by shedding jobs, closing offices and outsourcing back office work, but it said more needs to be done to offset the challenges in the market.
Amec, which is focused in the oil and gas industry, said trading was in line with expectations and its new structure should improve the business.
It has also agreed the sale of three assets worth around £100m and is in talks about the disposal of its core boiler business. Amec wants to raise £500m through disposals by June.
Like-for-like revenues so far this year are down 3pc on last year, while the company’s order book is flat. A weaker pound has provided a boost equivalent to the firm’s increase in net debt, which should be around £1.1bn at the end of the year. With much work still to be done and with hopes of a quick turnaround dashed, shares collapsed 20.4pc, or 119.6p to 465.9p.
Avocet Mining plunged as it revealed it had suspended operations at its Inata mine.
The gold miner, which is focused in West Africa, said a gold shipment had been seized from the mine on October 7 by angry ex-workers.
Avocet has challenged the legality of the seizure and a verdict is due on November 7. Operations at the mine have now been suspended and Avocet warned that work may not be able to restart without significant investment.
Meetings between the mine owner, its workforce and government officials are to be held over the coming days to try to find a resolution. Avocet warned that it may have to enter insolvency if funding cannot be secured.
In a production update, Avocet said it had produced 17,694 ounces of gold over the past three months, down from 21,086 ounces in the previous quarter.
The fall was, in part, due to the impact of maintenance work. But the sale price of the yellow metal was higher at around £860 per ounce, up from £742 in the second quarter of the year. Shares dived 30.4pc, or 21.38p to 49p.
Some 30 years on from the socalled Big Bang, the FTSE 100 finished 0.41pc, or 28.48 points higher at 6986.57. Barclays was the biggest riser of the day, gaining 4.8pc, or 8.7p to 190.5p, despite revealing PPI costs had risen by another £600m. Lloyds shares advanced as talk of the Government offloading its final stake in the bank started up again. Shares were up 2.9pc, or 1.62p to 57.5p.
Housebuilders were in the doldrums with Barratt falling 7.8pc, or 37p to 438.9p. Jefferies cut its target
price on property trust British Land (off 2.4pc, or 14.5p to 578p) and
Land Securities (down 1.9pc, or 19p to 985p). Kaz Minerals was among the top climbers on the stock market after it revealed copper production had ramped up in the third quarter. Silver production for the year is likely to exceed forecasts and gold output has been strong, too. The firm maintained its guidance for the year and shares jumped 6.8pc, or 19.3p to 302.1p.
Hunting finished just about in the black for the day after proposing a share placing. The services provider to oil and gas companies is looking to place up to 14.6m shares – equivalent to around 9.8pc of its current issued share capital – to help reduce its debt.
Hunting said revenues, which had fallen in the first six months of the year, had stabilised in the third quarter, helped along by a cost cutting programme across the business. It said that with the oil price improving, the business had reached the bottom of the market and was preparing for a return to growth. Shares edged up 0.5pc, or 2.5p to 510p.