Troubles within the UK defence market sent shares in Ultra Electronics tumbling yesterday as the contractor issued a stark profit warning.
Citing ‘mounting pressures’ in the funding of UK defence programmes, Ultra said a number of its orders had been hit by the Ministry of Defence pausing, cancelling or delaying programmes.
Last week top US general Ben Hodges warned that the UK was at risk of losing its position as a key ally to the US and a leading member of Nato due to cuts in the British armed forces.
The FTSE 250-listed firm said it now expects a full-year underlying profit of £120m, compared with original forecasts of £147m.
In a statement published on Friday after trading closed, Ultra said chief executive Rakesh Sharma had been ousted in anticipation of the poor figures and would be replaced by chairman Douglas Caster until a new boss is found.
Ultra ended the day as the biggest faller on the FTSE 250 index, diving by 19.5 per cent, or 297p, to close at 1230p. The collapse prompted executive chairman Caster to purchase 8,160 shares in Ultra at 1215p each for a total of £99,144.
Shares in fellow defence contractors Babcock International and Serco Group also fell due to pressures in the sector. Babcock was the biggest faller in the FTSE 100, closing at 753p, a drop of 7.3 per cent, or 59.5p. Serco ended the day at 101p, down by 6 per cent, or 6.4p.
Investors in Coca-Cola HBC AG bottled it after a downgrade from JP Morgan to ‘neutral’ from ‘overweight’ to see shares fizzle out at 2470p, a fall of 4.4 per cent, or 115p. Analysts also cut their price target to 2600p from 2800p. JP Morgan said the benefits of an anticipated deal that would make the bottling company a majority stakeholder in Coca-Cola Beverages Africa, the largest Coca-Cola bottler in Africa, may have been overstated.
Citing ‘potential recent deterioration’ of profitability at CCBA, the broker said growth from the deal would be closer to 10 per cent compared to the 30 per cent originally forecasted.
Competition challenges sent shares in funeral service provider Dignity falling by 8.3 per cent, or 204p, to end the day as one of the FTSE 250’s biggest fallers on 2253p.
The firm’s chief executive Mike McCollum warned it was facing an ‘increasingly competitive environment’. While the number of deaths increased by just 1 per cent in the period, underlying profits at Dignity grew 5 per cent to £79.4m, with revenues up 6 per centc to £243.9m.
Aggreko’s appointment of a new chief financial officer boosted shares in the business support services firm to 968p, 1.8 per cent or 17.5p higher. Heath Drewett will join Aggreko from architectural engineering company WS Atkins, where he was group finance director. Broker Jefferies has raised its rating from ‘hold’ to ‘buy’, while increasing its target price to 1250p from 850p.
Meanwhile, Dollar-earning FTSE 100 companies were buoyed by a weaker pound with AstraZeneca and Diageo among the FTSE’s biggest stars.
Cruise operator Carnival emerged as the biggest riser of the day, up by 1.7 per cent, or 83p to 4947p.
‘While UK equities remain vulnerable … we believe they are supported by the robust global economy as the FTSE 100 generates about two-thirds of its revenue from outside the country,’ Coutts analysts said.
But banks were spooked by further political uncertainty after a report published by the Sunday Times revealed that 40 Tory MPs had signed a letter of no-confidence in Prime Minister Theresa May.
Barclays, Standard Chartered, Royal Bank of Scotland and Lloyds Banking Group all traded lower as the markets closed.
The FTSE 100 ended the day at 7415.18, down 0.24 per cent, or 17.81.