Shares in Mayflower Corporation dropped more than 38 per cent after the maker of buses and truck bodies warned of a sales slowdown in its US heavy truck business.
It spelt yet more bad news for John Major, a Mayflower non-executive director who owns 219,000 shares in the company. The shares belonging to the former Prime Minister were worth £37,230 less by the end of the day, as the stock dropped 17p to 27.5p.
The stock market sell-off came despite the company's attempt to put a positive gloss on its trading update, which started by announcing new business wins worth £50m.
Investors focused, however, on the short-term outlook and here the company delivered a profits alert. Mayflower said that, following a recovery in the North American heavy truck market in the summer, this sector has experienced a "significant" reduction in order intake for fourth quarter delivery.
"Coupled with recent softening MVS [Mayflower Vehicle Systems] markets in the UK and Europe, customers continue to evaluate their response fully but it must be anticipated there will be an impact on MVS's contribution to the overall business this year," the company said.
Mayflower, run by chief executive John Simpson, said that "global uncertainties" continue to undermine customer confidence and it would be "prudent" to anticipate that for the second half of 2002, pre-tax profit will be no better than for the first six months of the year.
Old Mutual Securities reiterated its "sell" recommendation on the stock, and confirmed a reduction in its 2002 pre-tax profit forecast from £30m to £22m.
Mayflower said that its product, technology and market leadership gave it confidence that it would return to profit growth in 2003 and beyond.
Yesterday's new contracts, worth £50m, involve production programmes for Ford and a bus contract in the Far East. The Ford deal is a production order in the US of body structures for the company's GT40 super car, which will be introduced in 2004 and another contract is for supply of body panels for the Land Rover range in the UK, with production commencing in 2004.
Mayflower's TransBus is to build 120 of its new generation Enviro 500 double deck buses for Kowloon Motor Bus, in Hong Kong. The contract is worth £25m.