A devastating profit warning wiped nearly £58million off the value of WH Smith’s former newspaper distribution arm and led to the departure of two directors.
In a gloomy trading update, Connect Group slashed profit expectations following a period of ‘extremely disappointing’ trading.
The distribution firm, created via a demerger from WH Smith in 2006, was expected to make £42million-£45million profit this year but analysts now believe that figure could be £10million lower.
Slow sales of World Cup-related products, such as sticker books, at its newspaper and magazine wholesaler, Smiths News, contributed to the group’s poor performance.
Distribution firm Connect Group was expected to make £42-45m profit this year but analysts now believe that figure could be £10m lower
It was compounded by falling volumes and increased costs at its Tuffnells parcel delivery service.
The Swindon-based company will also close its parcel collection service, Pass My Parcel, due to increased costs and underperformance.
Investors were warned that, at the very least, the full-year dividend would be substantially reduced.
Chief executive Mark Cashmore and finance boss David Bauernfeind stepped down following the update. The shares closed down 44.8 per cent, or 23.3p, at 28.7p.
The FTSE 100 was as good as flat, edging 0.1 point lower to 7703.71, while the FTSE 250 ended the day 0.04 per cent lower, or 8.77 points, at 21232.87.
Just Eat shares took a hammering after rival Deliveroo announced plans to take a bigger piece of the takeaway pie by allowing restaurants that sign up to its app to use their own delivery drivers.
Stock Watch – Active Energy
Active Energy soared after it received clearance to sell its new ‘super fuel’ in Poland.
The fuel is a blend of wood fibres and reclaimed coal from slurry dumps. It will be used in coal-fired power stations across the country.
After extensive tests, the Polish government concluded that the fuel, a joint venture between Active and local firm Cobant, passed its new anti-smog legislation with lower levels of toxic emissions.
The Aim-listed firm shot up 21.79pc, or 0.73p, to 4.08p.
Previously it targeted independent restaurants and chains that did not have their own delivery staff. But now it will go after chip shops, kebab houses, curry restaurants and Chinese takeaways that have so far used Just Eat to connect with customers.
The announcement took a 4.7 per cent bite out of Just Eat’s shares, which ended the day down 40p at 810p.
Global miner Glencore settled a dispute with Democratic Republic of Congo state miner Gecamines, saving a key copper and cobalt joint venture.
Glencore will effectively write off £4.2billion debt, but securing the asset is crucial as the DRC is by far the biggest supplier of cobalt, which is key for electric cars and mobile phones.
Analysts at Credit Suisse said: ‘We see this deal as an overall positive for the company, albeit it is certainly not a win/win scenario for Glencore, with some concessions having to be made to put this issue to bed.’ Glencore shares ticked up 3.8 per cent, or 14.4p, to 398p.
On the FTSE 250, analysts at RBC Capital Markets jacked up car marketplace Auto Trader’s target price by 70p to 410p.
The broker said: ‘Auto Trader has a dominant position and attractive free cash flow generation.’
However, its target price is still short of Auto Trader’s shares, which ended the day flat at 422.5p.
Shares in sweetener maker Tate & Lyle turned sour after Jefferies downgraded the firm from ‘buy’ to ‘hold’.
The broker raised concerns it would be affected by a renegotiation of the North American Free Trade Agreement between the US, Canada and Mexico.
T&L makes high-fructose corn syrup sweeteners in the US that are exported to Mexico for use in soft drinks. Its shares slid 4 per cent, or 27p, to 643p.
On Aim, shares in British video game maker Team17 bolted upwards – rising 8.6 per cent, or 20p, to 252.5p – after it revealed Overcooked 2, a sequel to its popular game, will launch on August 7.
Fellow British tech firm Bango announced a deal allowing customers of Entel, Chile’s largest telecommunications company, to buy apps and music on Google Play and charge them to their phone bills. Its shares bumped up 0.3 per cent, or 0.5p, to 151.5p.