Market Report: Unilever takes knock from Brazilian crisis

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UNILEVER IS feeling the chilling impact of the Brazilian devaluation. Shares of the Anglo-Dutch detergents and foods giant were one of the poorest performing Footsie constituents, falling 37.5p to 612.5p as some analysts felt obliged to reduce their profit forecasts.

Goldman Sachs, the American securities house, is one which has lowered its estimates following the upheaval in Brazil. Henderson Crosthwaite also turned cautious.

Besides the devaluation hit, Unilever had to contend with Wednesday's disappointing statement from Nestle. The sprawling Swiss group failed to meet its 4 per cent growth target, a shortfall which could well occur at Unilever, given the similar geographical spreads of the two giants.

Unilever's profits last year are expected to come in around pounds 3bn. Before Brazil's problems materialised the stock market was shooting for about pounds 3.2bn for the current year.

Brazil is a major contributor to the 10 per cent of operating profits the Anglo-Dutch group derives from Latin America.

Until the latest wobble Unilever's shares held up relatively well. They hit a 707p peak last month.

In another hectic session, with turnover once again breaking through 1 billion shares, Footsie failed to hold hesitant early gains and ended 83.3 points in the red at 6,022.3p. The market was ruffled by US banking chief Alan Greenspan's caution and seeming split with President Clinton. Worries about Hong Kong's banking health also prompted caution. Supporting indices were weak and Government stocks scored gains of up to 55p.

HSBC, the banking giant, was off 48p (after 66p) to 1,718p on reports that it faced "huge" losses in Thailand. It was claimed the bank's Thai loan portfolio of around $3bn had been hit by a series of basic mistakes.

"A great complacency sets in when you see these economies grow year after year ... We took our eye off the ball," a HSBC executive is quoted as saying.

The banking group is due to reveal its 1998 results next month. Meanwhile it is thought to have won the battle to handle the Energis placing. National Grid wants to reduce its interest in the telecom group from 75 to 45-49 per cent.

HSBC was said to have placed the shares with institutions but it had to struggle to do so. Energis dipped 22.5p to 1,712.5p and Grid dulled 9.5p to 543.5p.

The HSBC concern hit Standard Chartered, down 33.5p to 808.5p. Other banking shares were mostly subdued.

Vodafone was again busily traded with the price firming 4p to 1,163; ScottishPower fell 9.5p to 654.5p as Dresdner Kleinwort Benson turned cautious.

Enterprise Oil and Lasmo, talking merger, fell back, although there were suggestion that Repsol may barge into the planned deal. The Spanish group has acquired a near 15 per cent stake in YPF, Argentina's largest company, and has made no secret of its desire to buy into other oil groups. Enterprise fell 8p to 242p and Lasmo 2.75p to 97.25p.

Granada lost 38.5p to 1,010p, reinforcing talk that it is preparing to make another major takeover strike.

Asda jumped 6p to 156p in busy trading as the monthly Taylor Nelson Sofres survey illustrated a sharp sales advance. Shares of the other big supermarkets gave ground. British Airways settled lower, 15.75p at 359.25p, following disappointing comments from two US airlines.

Sears, the struggling retailer, put on 7p to 354.5p as it capitulated to a 359p bid from the high street tycoon Philip Green. The higher Wolverhampton & Dudley Breweries offer for Marston Thompson & Evershed lowered the shares 5p to 288.5p. Marston promptly said no deal.

The stockbroker Henry Cooke Lumsden said yes to a 135p a share offer from Brown Shipley, owned by Kredietbank of Luxembourg, and the Ofex-traded shares jumped 65.5p to 130p.

Division, an IT group, gained 4p to 39.5p after the US company Parametric Technology mounted an agreed 40p a share offer.

The soaraway Internet spree showed signs of fading, with a sell-off in New York causing some alarm. Intelligent Environment rose 22p to 90p, and Internet Technology gained 30.5p to 172p after winning two telephone licences.

But Virtual Internet, which arrived on Tuesday following a reverse takeover, crashed 107.5p to 129p, only 11.5p above its suspension price. Voss Net lost 22p to 57.5p and Netcall 18p to 67p.

On-Line again led the way - but this time it was a retreat. The shares crashed 144.5p to 129p. After the market closed the company, little known at start of the year, produced a statement outlining a few developments which "are probably insufficient to explain the magnitude of the [share] rise".

Cheekily it went on: "The board feels that the rise can be explained by the expectations of investors that On-Line should reflect a valuation in line with its Internet profile and with the valuations of US internet companies."

Two directors have sold more shares, with one of them, Clement Chambers, given options at the prices the shares were sold. He now has 14 per cent against around 35 per cent before the price started its meteoric rise from 16p at the start of last week to 273.5p, where the company was worth pounds 9m.

Trading statements lowered the toy retailer Hamleys 10p to 133.5p; but lifted Enterprise Inns 16.5p to 379p and retailer Arcadia 30.5p to 167.5p. Alldays continued to suffer from its disastrous results, down a further 25p at 67.5p against 621.5p last year.

Brewers recovered from their dismal run; Bass frothed 38.5p to 782p and Scottish & Newcastle 30p to 730.5p. Whitbread rose 19p to 827p.

The first of what could be a run of woeful tales from Marks & Spencer suppliers came from William Baird, the textile group, It said last year's sales were down 4 per cent, and the shares fell 5p to 85p.

Tempus, the media buyer formerly called CIA, added 21.5p to 206.5p after HSBC lifted its profits forecast from pounds 11.7m to pounds 12.4m.

SEAQ VOLUME: 1.27 billion


GILTS INDEX: 116.94 +0.55

WAVERLEY MINING, where Ofex-traded Corporate Resolve is seeking to become the major power, has raised pounds 490,000 selling shares in Perseverance Mining, but is taking action about the sale of a further block of shares which it says it did not authorise. There is vague talk that Waverley could attract a full bid. Its shares are 6.5p against 132p three years ago. Corporate Resolve seeks to revive struggling businesses; its shares are 64.5p.

CAIRN ENERGY, which once enjoyed a share price topping 600p, was lifted from its 62p low by SG Securities which said the company was exposed to "very significant exploration upside in India and Bangladesh". The group has pounds 20m cash and the analyst Richard Savage says that even with a $10 oil price the company will remain cash-positive for the foreseeable future. The shares, in busy trading, moved ahead 9.5p to 71.5p.