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Electrocomponents slumps but wider FTSE gains
MARKET REPORT: A profit warning from Electrocomponents prompts investors to sell. Miners lead the blue-chip index higher.
Markets
Shares in Electrocomponents (ECM.L) bucked the wider London market’s upward momentum this morning, dropping sharply after the electronic parts distributor issued a profit warning.
Shares in the FTSE 250-listed company slumped 9.1% to 199.7p after it warned investors that full-year pre-tax profits would likely be ‘slightly below the lower end of consensus’, with the usual stronger second half of the year not expected to compensate sufficiently for margin pressures from the increased use of customer discounts, stronger performance from lower-margin technologies, and adverse foreign exchange movements.
The downbeat report prompted Seymour Pierce – which had forecast profits at the upper end of analysts’ consensus – to downgrade Electrocomponents shares ‘hold’ from ‘buy’ with a target price of 195p.
‘Whilst today’s news is disappointing it is worth noting that Electrocomponents is performing better than peer Premier Farnell and therefore remains our preferred play in this space,’ commented analyst Caroline de La Soujeole.
But Henry Carver at Peel Hunt disagreed: ‘We see better value elsewhere in the sector. Despite the 5% yield, we maintain our Sell’.
Miners lead the FTSE higher
The wider FTSE 250 moved 0.36% higher to 11,796. The blue-chip FTSE 100 index made similar gains, pulling back above the 5,800 mark by one point, helped higher by resources companies which have been boosted by hopes of more stimulus from the Chinese authorities.
Russia’s largest steel maker, Evraz (EVRE.L), rose 2.9% to 251p. Vedanta (VED.L) climbed by 2.6% to 1046p, Fresnillo (FRES.L) was up 2.5% to 1824p and Antofagasta (ANTO.L) rose 2.1% to 1,273p.
G4S directors quit after Olympics fiasco
Security company G4S (GFS.L) – a household name after botching Olympic security arrangements – was up in line with the market, to 264p, after announcing the results of a review of its Olympics contract. Alongside an apology for the ‘failure to deliver fully on the Olympic contract’, the company announced the resignation of chief operating officer David Taylor-Smith and Ian Horseman Sewell, managing director for G4S Global Events.
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- G4S PLC (GFS.L)
- Electrocomponents PLC (ECM.L)
- EVRAZ plc (EVRE.L)
- Electrocomponents PLC (ECM.L)
- Fresnillo PLC (FRES.L)
- Vedanta Resources PLC (VED.L)
- Antofagasta PLC (ANTO.L)
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