Dismay at RMC and Alcatel warnings

INVESTORS WERE rattled by a renewed bout of gloomy corporate news yesterday as Alcatel Alsthom, the French telecommunications equipment giant, and concrete group RMC issued profit warnings while John Lewis reported its first profit fall for five years.

The bad news follows a string of profit warnings and downbeat trading statements from multinational companies around the world. On Wednesday Bass, the brewing and hotel giant, warned of an economic slowdown in the UK.

Other companies, including the Hilton hotel chain, razor group Gillette and BTR, the engineering giant, have disappointed the market in recent weeks.

The steady flow of bad news - which has now spread across all sectors of the economy - has prompted analysts to slash their profit forecasts across the board.

Some equity strategists now expect average UK company earnings not to grow at all next year.

One observer said investors were now looking for any excuse to sell their shares. "Anybody that comes out with any news that isn't absolutely fabulous is treated with great suspicion," he said. "This market is in no mood for what it sees as failure."

Alcatel produced the shock of the day. The French giant - which was one of the best-performing European stocks of last year - stunned investors with a warning that the economic crisis in Asia and Russia, combined with spending cuts by large European telephone companies, meant 1998 profits would not meet market expectations.

On the Paris bourse, trading in Alcatel was suspended seven times as the shares plunged. They eventually closed down 38 per cent at 571 francs.

Alcatel said increased competition for customers was forcing large telecom groups such as Deutsche Telekom and Telefonica to cut back on spending. Meanwhile, sales to the Far East and Russia had been hit by the economic downturn.

The warning knocked shares in other telecom equipment suppliers including GEC, which dropped 8 per cent at 424p. Shares in European suppliers such as Siemens, Nokia and Ericsson also slipped.

Meanwhile, shares in RMC, the building materials group, crashed to a five-year low after the world's largest producer of ready-mix concrete warned of a profit slowdown in its two major markets.

The company said that a slump in demand in Germany and a slowdown in the UK in the second half of the year will have a negative impact on its 1998 profits.

Peter Young, the chief executive of RMC, said the dire state of the construction industry in the former East Germany was set to deteriorate further as the post-reunification building boom ground to a halt.

The bearish comments prompted City analysts to slash their profit forecast for 1998 by up to 10 per cent to around pounds 285m from around pounds 310m.

The downgrades were accompanied by a bout of selling that wiped more than pounds 170m from the company's market value.

Shares in RMC, which will drop out of the FTSE-100 on Monday, closed 68p lower, at 682p. Shares in fellow building materials producer Blue Circle, due to report its results today, fell.

Life and Style
food + drink
Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Arts and Entertainment
Ben Affleck stars as prime suspect Nick Dunne in the film adaptation of Gone Girl
filmBen Affleck and Rosamund Pike excel in David Fincher's film, says Geoffrey Macnab
Life and Style
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments