Market Report: Disaster damages Carnival's outlook

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The Independent Online

Investors ditched Carnival as its boss said its cruise brand Costa would take "two to three years" to fully recover after the fatal Costa Concordia accident off the coast of Italy last year.

Carnival reported its third quarter results yesterday and chairman Micky Arison said it could take three years for its Costa business to get back to normal after the Costa Concordia ran aground off the Tuscan island of Giglio in January 2012, with the loss of 32 lives.

The results also revealed a 30 per cent fall in third-quarter profit and Carnival warned that full-year sales could be down 3 per cent.

The Concordia disaster was followed by other issues with Costa ships including passengers becoming stranded on its Triumph vessel. But Mr Arison said Costa remained the number one cruise brand in Italy, France, South America and China, and should return to profit this year. But punters decided to abandon ship and it sank 134p to 2,258p.

Analysts at Jefferies said they saw "no outperformance catalyst" in the release from Carnival and rated it a hold, as it was still "too early to buy".

The shares were the worst performer on the benchmark index in a wider market that was largely treading water.

The FTSE 100 index advanced just 14.09 points to 6,571.46 as traders were looking for direction. Concerns about future US monetary stimulus reductions continued to weigh on investors minds. Alex Young, a senior sales trader at spread-better CMC Markets, said: "Most of the [Federal Open Markets Committee] are …seemingly intent on delivering daily conflicting messages to the market."

The defence and aerospace giant BAE Systems was boosted by news that Sweden will take up an option to buy more of its vehicles. The Swedish Defence Minister Karin Enstroem said its government would spend £100m on armoured all-terrain vehicles and BAE rose 6.9p to 450.9p.

Analysts at Jefferies were bullish about the prospects for jet-engines maker Rolls-Royce. They predicted its civil aerospace services business Total Care would improve, with the outlook by 2015-16 looking good. It rated it a buy and raised its target from 1,250p to 1,400p. The shares rose 17p to 1,132p.

Engineer Amec was out of favour after experts warned punters that the expected £100m-a-year dividend payout was not enough to justify the current price.

Amec is expected to return "surplus cash" to shareholders, which analysts at UBS calculate to work out at between £80m and £100m a year in the shape of a share buyback or special dividend. But this isn't enough to drive "outperformance of the stock", and UBS slashed its rating to neutral from buy. It also reduced its target price to 1,145p from 1,200p.

Punters heeded the warning, and Amec slipped 17p to 1,091p.

Diggers were weak as metal prices remained under pressure. The gold miner Randgold Resources lost 128p to 4,493p.

Pharmaceuticals group Shire weakened 31p to 2,489p as traders speculated about the prospects of buying the US group ViroPharma. Some said Shire has already made an offer, as had possible rival bidder Sanofi, with rumours that Sanofi's bid was higher.

Mid-tier events group Euromoney Institutional Investor added 98p to 1,149p following a trading update.

On Aim, President Energy said locations it is exploring in Paraguay had the potential for "giant" oil fields, giving it a 1.5p boost to 24.9p.

Image technology specialist OMG said its Vicon division worked with Audiomotion Studios on the newly released EA Sports game Fifa 2014. It used its mocap technology to capture the movements of players including as former Tottenham Hotspur and now Real Madrid star Gareth Bale. It scored a 1.5p rise to 31.75p.

Investors fell out of love with the dating website group Cupid when it reported a half-year pre-tax loss of £2.8m. The shares lost 3p to 64p.

Oracle Coalfields, which is developing Pakistan's first major coal mine, has reached a supply deal with the Chinese state-owned group Camce. Oracle powered up 0.675p to 2.225p.