Market Report: Premier Farnell loses its spark after profit warning

A busy day of financial results failed to mask the woes of Premier Farnell, which lost its spark after a profit warning.

The electronic parts distributor, down 26.6p at 140p, its lowest in six years, admitted sales growth has screeched to a halt, particularly in the US and the UK, with second-quarter sales up just 1.2 per cent compared with 5.4 per cent in the first quarter.

The FTSE 250 group now expects adjusted operating profits in the first half to be 10 per cent lower than last year when it made £45.5m.

Laurence Bain, the chief executive who took over from Harriet Green exactly three years ago, revealed that the company has launched a strategic review to solve its problems.

Analysts have speculated that a possible tie-up with rival Electrocomponents could offer the cost-savings needed to boost margins.

Activist investor Go Investment Partners has been building its stake in Premier Farnell to just over 4 per cent, fuelling the theory it could push for a deal or at least a sale of part of the business.

An otherwise healthy set of figures injected life into the FTSE 100, up 75.72 points to 6,631.0.

Drug giant GlaxoSmithKline, up 46p at 1,374.5p, beat analyst expectations with second-quarter sales of £5.88bn.

Investors also switched on to pay TV heavyweight Sky, up 8p at 1,132p, after it grew revenues last year by 5 per cent to £11.28bn.

Compass, down 58p to 1,028p, was a notable blue-chip exception as the catering group warned its restructuring would cost it up to £50m over the next two years. Compass’s third-quarter update revealed that while business was good in North America and Japan, boosting organic revenues by 5.1 per cent, emerging markets proved a struggle.

Shares in Pets at Home tumbled 13.9p to 274.1p as it revealed first-quarter like-for-like growth of just 1.7 per cent, leading chief executive Nick Wood to blame “very hot weather in July”.

Aim-listed Globo, which expects to make 6 to 7 per cent of sales in cash-strapped Greece, recovered 3p to 40.88p as the mobile business software group reassured investors about trading after its shares fell on Tuesday.