Market Report: Xaar loses almost a quarter after tile unit proves sluggish

Whatever Next: the market followed the retailer’s lead and piled into its shares

17 June 2014

Investors in Xaar were wishing it could print money rather than tiles, after a profit warning left the shares down nearly 23% today.

The FTSE 250 digital-printing firm said sales volumes in its tile decoration business — the largest part of the group — are not growing as fast as before.

The reduction in its tiles business has meant 2014 sales are expected to be £130 million for the full year, compared with last year’s £134 million and analysts’ expectations of £145 million.

Numis said it has reduced its pre-tax profit forecast by 12%, adding that there is “further earnings risk in the short term”.

However, the broker also said that its “long-term outlook remains positive with new product introductions expected to enhance revenues by around 4% [next year].”

It cut its rating to Hold and shares plummeted 170p to 572.5p.

The wider market was in a better mood and the FTSE 100 rose 18.23 points to 6772.87. Chris Beauchamp, market analyst at spread better IG, said: “The FTSE 100 is trying to make its first real gains in almost a week. There is some potential bid activity… helping to push traders into action… with Shire. Good figures from Whitbread have enlivened the situation too.”

Drugs giant Shire was top of the leaderboard on speculation it will be the subject of a takeover bid this year and shares soared 114p to 3650p.

Budget airline easyJet got a boost from stockbrokers Davy who raised its rating to outperform, from underperform, with a 1750p price target and shares climbed 20p to 1455p.

Clothing giant Next re-started its share buy-back programme last Friday. Retail analyst Nick Bubb said: “With the shares still usefully below the £64 buyback price limit, Next bought about 253,000 yesterday at around 6292p. Follow the bull?” The market certainly did and the shares rose 75p to 6395p today.

IT consultancy firm FDM has priced its float at 287p a share and plans to raise £242.7 million from listing on London’s main market. More than £234 million is for shareholders who are selling out.

BG Group sold its majority stake in a North Sea gas pipeline for more than £500 million to Antin Infrastructure Partners and BG lifted 3.5p to 1261p.

AIM-listed oil and gas firm Serica Energy has bought an interest in the North Sea’s Erskine Field from BP. Serica jetted 0.62p to 11.5p and BP, which will become a shareholder in Serica, ticked up 0.1p to 505.7p.

Directors of Australian miner Bullabulling Gold have rejected Norton Gold Field’s offer and said it is “inadequate and opportunistic”. Norton yesterday raised its offer to 8 cents per a share. But Bullabulling has recommended this be rejected and shares were flat at 4p.

Drug discovery tiddler Summit Corporation has established US operations in Cambridge, Massachusetts and was 0.38p healthier at 7.75p.

Market Report: Xaar loses almost a quarter after tile unit proves sluggish

Read More