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.
Oscar Pistorius trial: Defence's own witness contradicts athlete's version of events
Oscar Pistorius trial: The case against Oscar Pistorius – and why the prosecution claims his story doesn't add up
Almost 40m gallons of drinking water discarded – because a man urinated in it
Peaches Geldof funeral: Private ceremony to be held at same place as her mother Paula Yates on Easter Monday
Shropshire criminals ‘using unmanned drones and infrared cameras to find illegal cannabis farms’ – and then steal from the growers
The food poverty scandal that shames Britain: Nearly 1m people rely on handouts to eat – and benefit reforms may be to blame
US Navy christens huge $3 billion destroyer ship USS Zumwalt that appears as a fishing boat on enemy radar
Scottish independence: It is the English who should be on their knees, begging the Scots to vote ‘No’
Nigel Farage fatigue? Half of voters ‘immune’ to Ukip’s appeal
Nigel Farage on Have I Got News For You: Ukip leader ridiculed over expenses and party 'fruitcakes'
Nigel Farage: I’m taking on the status quo, and the Establishment’s fighting back
- 1 Are you turning into your dad? The top ten signs you've embraced dad-ism revealed as survey says 38 is age men turn into their father
- 2 Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'
- 3 Overheard in Waitrose: documenting the chatter in 'Britain's poshest supermarket'
- 4 24 people applied for the 'world's toughest job', here are their interviews
- 5 Grace Dent on TV: Game of Thrones has jumped the shark
iJobs Money & Business
£150.00 per week: QA Apprenticeships: This company has been providing on site ...
£221.25 per week: QA Apprenticeships: This company is a well established Inter...
£40000 - £50000 per annum: Harrington Starr: Client Relationship Manager - SQL...
£35000 - £50000 per annum: Pro-Recruitment Group: Take your chance to join the...