Market Report: Euro Disney takes another pounding

John Shepherd
Tuesday 20 April 1993 23:02

SHARES in Euro Disney, owner of the theme park outside Paris, took a further pounding yesterday, plunging by 65p to 918p. The price has fallen by 22 per cent from pounds 11.73 since the start of the month.

There are fears among analysts that next week's results for the first half of 1992/93 will again show heavy losses, and there is additional concern over how phase two of the park's development will be funded.

Losses of Fr500m ( pounds 61m) are expected for the second quarter, giving a half-year deficit of nearly Fr1bn.

Attendances have increased, but in part as a result of a recent special cut-price admission offer for Parisians, and have not been accompanied by a significant rise in spend per head.

Analysts will next week be able to picture what a full year's trading looks like, by lumping together the results for the second half of 1991/92 and the interim figures.

The concern about funding for phase two is mainly because of the company's existing mountain of debt - some Fr19bn ( pounds 2.3bn). This week's cut in French interest rates lowers the annual repayment bill by only about Fr22.5m.

Euro Disney was an exception to the trend yesterday, which saw the FT-SE index reclaim ground above 2,850 with a 26.1 point increase to 2,856.1. Volume trading was more respectable than Monday's slow start to the account at 543 million.

Banks remained in vogue following the easing in French rates, and on hopes of a similar cut tomorrow by the German Bundesbank.

Abbey National, in particular, was strong, with a 17p rise to 395p on the back of bullish statements made about the housing market at the company's annual meeting.

National Westminster climbed 11p to 472p, aided by good first-quarter results by the companay's US side. Barclays gained 13p to 427p.

Some shares benefited from buying by US investors, even though they were again in bearish mood in early dealings on Wall Street.

Wellcome, weak of late, regained some ground with a 32p spurt to 734p as Lehman Brothers executed a buy order in afternoon dealings. Glaxo, which enjoyed a firm overnight performance on Wall Street, advanced 17p to 580p.

The mood in the City remained optimistic, having been uplifted on Monday by the CBI distributive trades survey showing a higher than expected rise in high street sales.

Argos firmed 2p to 310p, Boots added 11p to 486p, Dixons rose 13p to 211p, and Kingfisher gained 5p to 592p. Amber Day, however, shed 1p to 74p ahead of today's results,.

Food retailers also performed better, with Argyll moving up 6p to 244p and Iceland climbing 11p to 689p. Kwik Save rose 10p to 679p, and Tesco moved off this year's low with a 6.5p increase to 226.5p.

Second liners again enjoyed much of the action, with 309 million shares traded.

J Billam, the engineer, was a notable climber, with a 23p surge to a 1993 high of 240p amid a stock shortage. Despite its exposure to the aerospace industry, some analysts believe the company is undervalued with the shares trading on a p/e of 10.

Billam, though, does supply to the motor trade, which has recently crept back into the market's good books on strong new car sales.

Confirmation of a takeover approach lifted Excalibur by 2p to 17.5p. Suter, unchanged at 139p, has a 5.9 per cent stake in the jewellery maker and is tipped as the most likely bidder. Suter is said to be keen to make acquisitions, having cut gearing from 70 per cent to under 5 per cent by selling a valves subsidiary for about pounds 36m.

Fallers included English China Clays, down 5p at 434p as James Capel downgraded expectations for 1993 by pounds 11m to pounds 83m pre-tax.

Vardon dropped 6p to 83p. Causeway Smaller Companies Fund has sold its 12.5 per cent holding, originally bought for 45p a share, through SG Warburg at 72p.

Share prices advanced across a broad front, indifferent to overnight falls on Wall Street and in Tokyo. Some 543 million shares were traded, much of it in second-line stocks. The FT-SE 100 index rose 26.1 to 2,856.1. The account ends on 7 May, and settlement is on 17 May.

WPP, the advertising group, is attracting strong American interest following its pounds 88m rights issue last month. It has been holding institutional presentations across the Atlantic this week. There is also talk that Ogilvy & Mather, its ailing advertising agency, has clinched a dollars 30m creative account from Cheesebrough-Pond's, a Unilever subsidiary. The shares climbed 6p to 66p and 10 million were traded.

Shares in Downiebrae, the Glasgow flange-maker, have trebled since the financier Robert Newman bought a 29.9 per cent stake in January. Mr Newman has said the group was a perfect vehicle for acquisitions, but has yet to make any. Downiebrae was expected to buy an engineering company, but word is that a deal is near involving leisure assets. The shares were unmoved at 65p yesterday.

Expect a big deal from Vizcaya, former zinc mining outfit now involved in property. Shares were suspended at 5.75p. Desmond Bloom, chairman, who owns 29.9 per cent and is said to have once played guitar for Screaming Lord Sutch, is near to acquiring a private commercial property company with assets of pounds 40m and debt of pounds 33m. Shares will be issued to fund the deal.

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