Slowdown in Chinese demand triggers Cookson profit warning
Wednesday 12 November 2008
Cookson issued a profits warning yesterday, blaming the economic situation and the cutbacks in China for weak market conditions it expects will continue into 2009.
The industrial materials group – which is exposed to both the downturn in the steel industry, through its ceramics division, and in consumer spending, through its electronics and precious metals businesses – saw its shares plunge 24.4 per cent to close at 130p yesterday.
Overall performance for this year will still be "significantly ahead" of 2007, boosted by the acquisition of the Foseco foundry business in October 2007 and by currency translation gains. But the results will not meet management expectations, the group said.
"In recent weeks the group has started to see clear evidence of the global financial turmoil impacting its end-markets, particularly global steel production," Cookson said. "Trading performance in 2009 will be dependent upon the depth and duration of the global economic slowdown."
The global market for the company's Steel Flow Control and Linings businesses, for example, was down 3.2 per cent year-on-year, in September, largely because China's steel production was down by 9.1 per cent that month. Although there are not yet figures for October, steel companies across the world have been cutting production and de-stocking inventories to support prices.
Despite the collapsing stock price, not everyone is pessimistic. Harry Philips, at Evolution Securities – who has a "buy" recommendation on the shares – says the market price is assuming a covenant breach that only becomes an issue with a 20 per cent drop in steel production. "The reality is that the company trades comfortably within covenants," Mr Philips said.
New UK station Russia Today gives a very bizarre view of Britain
By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen
New essay by JK Rowling went live on Pottermore site this morning
Top Gear presenter is no stranger to foot-in-mouth controversy
- 1 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 2 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 3 Top Gear presenter Jeremy Clarkson criticised for beer tweet
- 4 The bubble bursts for Sodastream
- 5 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Top Gear presenter Jeremy Clarkson criticised for beer tweet
The bubble bursts for Sodastream
Russian politician says Apple CEO Tim Cook should be 'banned' from country after coming out as gay
'Santa Claus' dead: John Moore starred in Coca Cola and Morrisons adverts
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...