London close: Carnival sinks

J.H. | ShareCast | 22 Mar, 2011 16:58 - Updated: 07:26 | | |

Cruise Ship

A confident start was derailed by worse than expected inflation figures and a rally in the final hour of trading only brought out profit takers right at the death, leaving Footsie in the red.

UK annual inflation rose faster than predicted in February, as surging utility bills drove up living costs.

Consumer price index annual inflation increased to 4.4% last month, up from 4% in January, with ‘housing and household services’ accounting for 0.13 percentage points of the rise. The market had been bracing itself for a rise in inflation, but only to 4.2%.

GKN was the day’s worst performing blue-chip on speculation it is going to get involved in a bidding war for French peer Latecoere. The French aerospace firm, which provides doors for Boeing and Airbus, is looking for a buyer, according to reports from a French newspaper. Chinese aviation group AVIC and Dutch aircraft firm Fokker-Stork are also potential bidders.

Meanwhile, specialty chemicals group Johnson Matthey, which is heavily dependent on the catalytic converter market, and Inchcape, the car seller, were sharply lower on the back of concerns over their exposure to the Japanese car industry. Toyota and Honda have extended plant shutdowns until the weekend, at least.

Cruise operator Carnival, already under pressure because of rising fuel costs, was friendless after its first quarter results. Revenue in the three months to the end of February edged up to $2,652m from $2,441m the year before. Pre-tax profit dipped to $157m from $160m a year earlier.

Prudential is “firing on all cylinders”, with its final results beating consensus expectations on all key performance measures, according to UBS. The Swiss bank remains a buyer and ups the target price from 800p to 850p, saying “our detailed analysis suggests a strong underlying picture.”

Elsewhere in the financial sector Royal Bank of Scotland was buoyed by comments from the group's managing director and head of corporate finance, Tom Emmet, who said the bank is rubbing its hands at the prospect of being involved in at least two flotations in the Middle East and Africa region in 2011 and a further seven to ten mandates for bond issuances.

Fund manager Schroders got a leg-up from Citigroup, which has raised its price target for the ordinary shares from 1960p to 2000p.

Cairn Energy stood out in a generally firm oil sector. An update on the oil explorer’s plans for Greenland was generally well received. RBS analyst Phil Corbett said that Greenland is an exciting exploration opportunity over the long term, “and that the shares deserve to trade at a premium to our 400p estimate of the read through from the Vedanta deal.” RBS rates the shares a “buy” and has a 510p target price for the stock.

Anyone hoping that the release of the results would coincide with an agreement with the Indian authorities over the proposed sale of its Rajasthan assets to Vedanta was disappointed, however, as the sale of its 51% stake in Cairn India is still awaiting approval. Cairn posted a net profit of $1.08bn in 2010, up from $53m.

Rank Group has had a bumper bingo win today following the receipt of £74.8m it overpaid on its bingo revenues, with more to come in interest payments. At the time of its 2010 results announcement Rank estimated the repayment would be £65m plus interest.

Turkish Airlines has signed a $200m order for Rolls-Royce’s flagship Trent 700 engines to power three Airbus A330 freighters.

Punch Taverns, the biggest pubs group in Britain, is to split itself in two by the end of the summer and sell thousands of boozers. The review, which started in October, has concluded that the way forward is to separate the Spirit managed pubs business from the struggling leased operation - Punch. This will create two independent public companies and allow the investment and development needed to speed up its operational turnaround and drive growth.

The market – most of it anyway – raised a glass to news of the deal. Broker Peel Hunt was a dissenting voice. “The proposed demerger is less favourable to equity shareholders than we would have assumed, and as a result we expect to reduce our valuation of Spirit to c70p. Although shareholders still get the potential benefit of equity in the tenanted division of Punch, we struggle to attribute any value to this,” the broker said, as it moved its rating from “buy” to “hold”.

Another stock getting downgraded is advertising giant WPP. Exane BNP Paribas has moved to a neutral stance on the company that some pundits speculate may be the subject of a move by the Chancellor of the Exchequer in tomorrow’s Budget to move its tax base back to Britain from Ireland.

Shares in troubled sportswear retailer JJB Sports shot up this morning ahead of the results of the vote on the firm’s controversial restructuring plans. Speculators were betting that the proposal would get the thumbs up from creditors and investors, and their hunch proved correct though, as per the old adage of “buy on the rumour, sell on the fact”, the shares came off the top when the vote in favour was confirmed.

Shares in rival JD Sports tumbled on the news that its downmarket rival looks like it will still be around for a while yet. The trendy sportswear seller had considered making a bid for JJB but walked away after piecing together a profile of JJB’s prospects from the latter’s public announcements relating to its proposed restructuring. Sports Direct, the other big sportswear retailer, also fell back, though not as much as JD Sports.

Sticking with turnaround situations, shareholders in AIM-quoted AssetCo have passed all the resolutions at its reconvened general meeting today after chief executive John Shannon was forced to vote in favour. The outsourced fire services provider obtained an injunction yesterday evening that required Shannon to vote in favour of the resolutions because he had originally promised irrevocable support for them. AssetCo can now raise £16m at 10p a share.

Ports operator Forth Ports has agreed a bid worth 1,630p a share from major shareholder, the Arcus European Infrastructure Fund. Shareholders will also get to keep the proposed final dividend of 20p a share expected to be paid on 13 May. "The Arcus offer gives Forth Ports shareholders the opportunity to realise their investment for cash at a fair price,” chairman David Richardson said.

An extensive exploration programme in 2010 has hauled gold miner Petropavlovsk’s proven and probable reserves up by 36%.

Treatt, which makes ingredients for the flavour, fragrance and cosmetic industries, said results for the full year are expected to be materially higher than previously anticipated after strong trading at its US division. Trading during the half year 'significantly exceeded expectations' while order books have remained strong, the group.

Beowulf Mining pulled out of its recent share price slump after releasing assay results for the first 10 drill holes on its Kallak South iron ore project in Sweden. The drilling programme has confirmed the presence of a high grade iron ore of a similar type and quality to the ore uncovered at Kallak North.

VPhase, the energy saving products group, made “considerable” progress last year and thinks it should begin to break even on a monthly basis by early 2012.

The share price of spread betting firm London Capital has taken a battering since Irish bookmaker Paddy Power dropped it as a partner but it clawed back some of its losses Tuesday after well received results.

Total revenue in 2010 rose by a quarter to £34.5m from £27.6m in 2009, while adjusted profit before tax climbed 8% to £6.5m from £6.0m the year before. The company intends to raise £8m through a placing of shares.

Targeted online advertising firm Phorm is another rattling the collecting tin. It is raising £16.1m from the issue of loan notes with an annualised interest charge of 15%. Existing loan notes worth £6.1m will be cancelled so the net cash inflow will be £10m before expenses.

Higher costs of sales and overheads caused losses to widen at Zenergy Power in 2010. Shares in the superconductor energy technology firm. which announced last month that it is up for sale, dropped by a fifth after the annual results were released.

FTSE 100 - Risers

Essar Energy (ESSR) 449.40p +2.04%

Cairn Energy (CNE) 428.00p +1.98%

BG Group (BG.) 1,505.50p +1.62%

Resolution Ltd. (RSL) 283.00p +1.47%

Prudential (PRU) 733.50p +1.45%

National Grid (NG.) 585.50p +1.30%

Inmarsat (ISAT) 590.50p +1.11%

ICAP (IAP) 512.50p +0.99%

Royal Bank of Scotland Group (RBS) 41.79p +0.97%

Tullow Oil (TLW) 1,388.00p +0.80%

FTSE 100 - Fallers

GKN (GKN) 189.10p -3.77%

Carnival (CCL) 2,452.00p -3.08%

Johnson Matthey (JMAT) 1,835.00p -2.60%

ITV (ITV) 84.70p -2.19%

Fresnillo (FRES) 1,455.00p -2.02%

Smiths Group (SMIN) 1,307.00p -1.95%

TUI Travel (TT.) 228.20p -1.93%

Serco Group (SRP) 564.50p -1.91%

WPP (WPP) 757.00p -1.82%

Burberry Group (BRBY) 1,119.00p -1.67%

FTSE 250 - Risers

Rank Group (RNK) 147.00p +13.51%

Petropavlovsk (POG) 1,046.00p +3.05%

Computacenter (CCC) 432.50p +2.98%

Exillon Energy (EXI) 394.20p +2.55%

Punch Taverns (PUB) 75.25p +2.31%

Mitchells & Butlers (MAB) 301.90p +2.24%

PartyGaming (PRTY) 180.00p +2.04%

FTSE 250 - Fallers

JD Sports Fashion (JD.) 915.00p -5.13%

Inchcape (INCH) 349.90p -4.48%

CPP Group (CPP) 282.20p -4.47%

Laird (LRD) 144.10p -3.81%

Pace (PIC) 161.50p -3.81%

Helical Bar (HLCL) 269.50p -3.34%

Jupiter Fund Management (JUP) 280.60p -3.07%

FTSE TechMARK - Risers

Cryptologic Ltd. (CRP) 75.00p +66.67%

DRS Data & Research Services (DRS) 23.00p +13.58%

FTSE TechMARK - Fallers

Oxford Biomedica (OXB) 5.62p -5.46%

Ricardo (RCDO) 355.00p -3.79%

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