Sale of £126m worth of energy services group's shares by family trust hits sentiment
Energy services business Wood Group missed out on a market rally which saw the FTSE 100 reach its highest level for three weeks.
The company's shares fell 35p to 780p. a decline of more than 4%, after the Wood family trust and members of the Wood family sold 4.4% - 16.3m shares which represented their total stake - at 775p each through Credit Suisse, raising around £126m. Sir Ian Wood, the departing chairman and grandson of the company's founder, said he had no current intention to sell his 2.4% shareholding.
But Oriel Securities said this was a good opportunity to buy into the company:
Overall we think [its] strong international position in offshore facilities, subsea and production support leaves the company well placed to take advantage of increasing industry spending.
Andrew Whittock at Liberum Capital kept a hold rating and said:
Given the family's apparent lack of interest in the business we would not read anything into this share sale
With the immediate issues facing Greece and Spain seemingly resolved for the moment, investors turned inevitably to the problem confronting the US, namely the tax rises and spending cuts due to come into force next year, the so-called fiscal cliff. For most of the day, there was growing optimism that Democrats and Republicans could come to a deal, so markets were in a reasonably buoyant mood. The FTSE 100 finished up 67.02 points at 5870.30, its highest since 6 November. But after the UK market had closed after the US house speaker John Boehner said there had been no substantive progress in the last two weeks, unsettling the US market.
Miners were among the leading risers, as investors sought out riskier assets again. Rio Tinto rose 149.5p to £30.90 after it said it planned to cut costs by $7bn over the next two years and sell further assets to offset falling commodity prices. It intends to increase output at its iron ore business, which accounts for more than 80% of earnings. Kazakhmys climbed 40.5p to 719p, and Anglo American added 57p to £17.64.
Elsewhere Burberry continued its recent rise, up 43p to £13.17, helped by some excitable market chatter of a possible £20 a share offer.
Pennon put on 26p to 624.5p after the water company, which recently warned on its waste business and said it was unable to accept proposed licence changes from the Ofwat regulator, reported results in line with forecasts. Half year profits rose 3.4% to £111.1m, and Angelos Anastasiou at Seymour Pierce said:
Unsurprisingly, Pennon's interim results are exactly as outlined in the unplanned trading statement on 15 November. Overall: South West Water very good, but [waste group] Viridor disappointing in the short term. It will take a while for full confidence to be regained, but we believe that investors will still appreciate the underlying story.
Kingfisher, the owner of B&Q in the UK and Castorama in France, fell 1.6p to 279p after like for like sales for the third quarter dropped 2.8%. Retail profits fell 5.9% to £257m. Chief executive Ian Cheshire said it was a solid performance for the three months after a tough first half but added:
Our markets remain challenging, with consumer confidence still weak and so we maintain our strong focus on margin, costs and cash.
Among the mid-caps Invensys soared 25p to 305p after Wednesday's late news it had sold its rail business to Siemens for £1.74bn.
Housebuilders moved higher after a positive note on the sector from analysts at HSBC. Persimmon put on 24.5p to 796.5p and Bovis Homes was 17p better at 550p.
RPC, which makes plastic packaging such as jars, lost 35.9p to 390p as it felt the effects of the crisis in the eurozone, which accounts for 64% of its turnover. It said half year sales fell £69m to £518m although operating profit was up 4%. The company plans to close plants in Antwerp in Belgium and Beuningen in the Netherlands as part of cutbacks which will cost around £30m.
BSkyB lose 7.5p to 771.5p as analysts at Jefferies downgraded the satellite broadcaster. They said:
With shares rerating 20% since April, we no longer believe Sky's valuation reflects the challenges it faces as the UK's incumbent pay TV platform as the market matures. With growth slowing we see increased competition for subscribers weighing on prices/churn and new entrants driving up the cost of content. As such we see risks to the downside and move to underperform [from hold].
Chip designer Arm dipped 10p to 762.5p on worries about a reported poor performance from Microsoft's Surface tablet, which uses the UK company's architecture. Liberum Capital repeated its sell recommendation, saying:
Digitimes reports that upstream orders for the Windows RT based Microsoft Surface device has been cut by half from four million to two million units. Demand for other Windows RT devices from Asustek and Samsung is also weak. This is in line with our view that Arm is unlikely to find much success in the Windows based tablet and notebook market due to software compatibility issues. We believe a significant part of Arm's current valuation multiple is based on its taking material share from Intel in the Windows-based notebook market. We also expect Intel to continue to take share from Arm in the Arm-dominated smartphone and tablet markets given that power consumption levels are now similar.
Lower down the market, troubled card protection group CPP fell 21% to 15.75p. After the market closed on Wednesday, its potential suitor, US group Affinion, said it had decided not to make an offer for the business. CPP said it was in talks with its banks about its debt facilities and was also considering alternative financing and strategic options.
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