LONDON (ShareCast) – Rolls-Royce‘s shares tumbled after the group said it expects flat 2014 revenue and profit due to cuts in government defence spending. The world’s second-largest maker of aircraft engines revealed an estimated 15-20 per cent slump in defence revenue would hinder results this year as it reported its full-year 2013 earnings. Sector peers Meggitt (Other OTC: MEGGF – news) and BAE Systems (LSE: BA.L – news) were both also firmly in the red.
Hot on its heels was Tate&Lyle, which issued a profit warning for the full year, saying that despite a solid start to the final quarter, constant-currency profits for the year ending March 31st are now expected to be broadly in line with last year on the back of lower Splenda sucralose pricing. The news prompted Goldman Sachs (NYSE: GS-PB – news) to cut its target price on the stock.
Fund manager Aberdeen was another heavy faller after Jefferies cut its rating from ‘hold’ to ‘underperform’, saying that the recent acquisition of Scottish Widows Investment Partnership will not compensate for the slowdown in the group’s main equities business. “ADN’s future prospects mean its earnings deserve, in our view, a lower multiple,” said Equity Analyst Jason Streets. He lowered his target price for the stock from 430p to 350p.
Lloyds was also in sharp decline following its full-year results. The group faced criticism for its decision to increase its bonus payments, with Chief Executive Antonio Horta-Osorio forced to defend his £1.7m payment in an interview with the BBC earlier today. Investors have also been concerned about the uncertainty surrounding the group’s return to full private ownership.
Imperial Tobacco (LSE: IMT.L – news) led the risers this afternoon, lifted by a positive first-quarter report and market chatter around the possible initial public offering of its logistics business. The cigarette giant said first-quarter underlying tobacco net revenue rose 1% to £1.56bn as the company targeted growth markets. Sector peer British American Tobacco (LSE: BATS.L – news) was also one of the day’s biggest risers.
Shire (LSE: SHP.L – news) climbed after it said that Chief Financial Officer (CFO) Graham Hetherington is to step down as of next month, as the company revealed “excellent” results for 2013 which, after a pick-up in earnings growth in the fourth quarter beat forecasts. In a statement, the CFO said that he will leave Shire in “robust financial health”.
Oil engineer AMEC (Other OTC: AMCBF – news) headed north after the company made a firm offer for Swiss rival Foster Wheeler (NasdaqGS: FWLT – news) and beat forecasts with its 2013 results.
FTSE 100 – Risers
Imperial Tobacco Group (IMT) 2,353.00p +5.75%
Shire Plc (SHP) 3,190.00p +1.56%
British American Tobacco (BATS) 3,030.00p +1.17%
International Consolidated Airlines Group SA (CDI) (IAG) 433.70p +0.95%
Royal Dutch Shell (Xetra: R6C1.DE – news) ‘B’ (RDSB) 2,279.50p +0.91%
Royal Dutch Shell ‘A’ (RDSA) 2,125.00p +0.52%
Amec (Munich: AQ4.MU – news) (AMEC) 1,097.00p +0.46%
Reed Elsevier (Frankfurt: RDEB.F – news) (REL) 912.00p +0.44%
Legal & General Group (LGEN) 233.00p +0.26%
Reckitt Benckiser Group (RB.) 4,864.00p +0.19%
FTSE 100 – Fallers
Rolls-Royce Holdings (RR.) 1,010.00p -16.53%
Tate & Lyle (LSE: TATE.L – news) (TATE) 665.00p -15.45%
Aberdeen Asset Management (Other OTC: ABDNF – news) (ADN) 404.80p -5.33%
Tullow Oil (LSE: TLW.L – news) (TLW) 758.00p -4.35%
Lloyds Banking Group (LLOY) 80.13p -4.07%
Meggitt (Frankfurt: MGI.F – news) (MGGT) 517.50p -2.82%
BAE Systems (BA.) 427.10p -2.82%
Mondi (Frankfurt: KYC.F – news) (MNDI) 960.50p -2.78%
Antofagasta (LSE: ANTO.L – news) (ANTO) 903.00p -2.64%
Barclays (Berlin: BCY.BE – news) (BARC) 253.80p -2.55%
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