Raft of profits warnings lead to downgraded expectations

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A slowdown in consumer spending, the Blackwater scandal in Iraq and yet another scare over the quality of imports from China: just some of the factors blamed for a slew of profits warnings that rocked investors in a string of companies yesterday.

Shares in five separate companies dived sharply as their management warned investors to downgrade their expectations.

ArmorGroup, whose value slid by 41 per cent, issued the most serious alert, with chief executive David Seaton quitting the company following its admission that this year's profits would not match last year's total of £10.6m.

ArmorGroup, which provides security services in some of the world's most notorious trouble spots, said its business had been damaged in Iraq by growing concern about the conduct of private security companies following the Blackwater scandal. The US company is facing an investigation over an incident in Baghdad in September during which 17 Iraqis were killed.

However, ArmorGroup has also failed to secure a string of other lucrative contracts and may be forced to write off £1m it has spent on fees for advisers on an acquisition that now looks set to fall through.

Shares in Pendragon, the second-hand car dealership, fell almost as sharply, with 35 per cent of the company's value destroyed by its second profits warning this year. Pendragon said it would miss its profits target for 2007 by £12m and by £18m in 2008, following a squeeze on used car prices and tough trading conditions in the US.

Signet, the jewellery retailer, also blamed the difficult consumer environment in the US for a reduction in its profits forecasts. Shares in the company fell 17 per cent.

At Character Group, meanwhile, investors were warned that the company would lose £2.5m of sales revenue over the Christmas period because of the withdrawal of 500,000 Bindeez toys. Six children in the US and Australia have been hospitalised after swallowing the toys because they contain a chemical that the human body converts into a dangerous drug when ingested. The company said it was switching suppliers after finding a link to the GHB drug.

Finally, the value of Patientline also fell yesterday after announcing its losses in the first half had doubled compared to the same period last year. The company warned it only had a future if it was able to restructure its debts.