Yesterday's trading: Thomas Cook's share getaway
Storm clouds hovered above package tour operator Thomas Cook as the shares nosedived to 197.4p and closed 26¼p lower at 203½p.
Very bad January: The tour operators share nose dived
Peter Fankhauser, head of Continental European operations, sparked the hefty sell-off after revealing at the International Tourism Fair in Berlin that the group had experienced a 'very bad' January, the most important month for summer holiday reservations. Bookings have recovered in recent weeks but he also warned that next year 'will be even more difficult than this year'.
Although Fankhauser suggested the group may still meet its sales targets this summer if last-minute bookings come through, the damage to the share price had already been done. Sellers swelled turnover to a well above average 18m shares. In what appeared to be a classic case of the right hand not really knowing what the left hand is doing, an obviously embarrassed Thomas Cook rushed out a reassuring statement ahead of next Thursday's planned trading statement.
It said the board remains confident in achieving its expectations for the year as a whole and believes the group remains well positioned for the future. Summer holiday bookings have recovered and capacity has been reduced by 10% in Continental Europe.
Rival TUI Travel, formed by the merger of First Choice Holidays and the tourism division of Germany's TUI, was sold in sympathy down to 216½p and closed 14p off at 226¼p.
Under the weather and down 77 points before elevenses, the Footsie perked up later when Wall Street replaced a 58 point loss with a 144 point gain. The close in London was 18.25 points higher at 3712.06.
Traders in New York were buoyed by news that US retail sales began the year much stronger than expected and the Dow Jones closed up 239.66 at 7170.06. And although General Electric lost its top level AAA Standard & Poors credit rating - held since 1956 - the downgrade was not as bad as feared.
Insurers were a mixed bag. Aviva succumbed to renewed selling after a Citigroup downgrade to sell from hold. The shares collapsed to 179.4p and closed 22½p down at 191p following turnover of 32.7m. The broker warned clients Aviva looks risky. It has high asset leverage, not just to corporate bonds (£30bn) and asset backed securities (£8bn) but to equities (£11bn), property (£4bn) and loans (£22bn). Its available capital requirement is the lowest in the sector. The reassuringly dull results of Standard Life (up 11½p at 172.8p) helped Friends Provident advance 6.2p to 72.3p and Old Mutual firm 1.6p to 38.6p.
Institutional demand helped SIG, the former Sheffield Insulation Group, rise 13¾p to 112¾p. Director buying lifted logistics group Wincanton 12¼p to 133¼p.
Talk of a pending upbeat circular attracted buyers to Heritage Oil, 21p higher at 259p. Speculative buying helped JKX Oil & Gas gush 11p to 208p. Defence company Meggitt climbed 8¼p to 121¼p after Goldman Sachs upgraded to buy from neutral.
Shares of newspaper and magazines distributor Dawson Holdings were shredded after it announced the loss of a major contract with magazine distributors Seymour and Frontline Distribution, worth around £110m per year. The close was 15p lower at 34½p. Broker Shore Capital says it does leave question marks over the long-term sustainability of the current 2009 dividend payment of 7.5p. It expects it to be maintained but thereafter payment becomes more uncertain.
SHARES ADVICE & TOOLS
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Conveyor belt group Fenner crashed 21¼p to 41p on a shock warning that first-half operating profits are likely to be down around 10pc year on year. Net debt at the end of February had increased to £190m.
Broker Collins Stewart downgraded full year operating profit expectations by a similar amount but reassured shareholders that the group will pay a maintained dividend. At current levels, the shares offer a good, albeit geared, play into industrial recovery.
A profitable bank? Surely not. Arbuthnot Banking Group gained 5p to 220p after returning a profit of £500,000 and a 21p dividend in 2008. It remains well capitalised with all lending from its deposit base.
Workspace, the property investor where veteran investor Jack Petchey is a major shareholder, firmed ¾p to 11¼p after raising £87m via a rights issue and renegotiating its debt facilities.
Profit-taking after good annual results left undertaker Dignity 20½p easier at 604p. The group conducted 68,700 funerals in 2008, up 3.3% compared to a flat death rate in the UK.
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