Gloomy profit forecast trims Kingfisher's wings

MARKET REPORT

Kingfisher, the struggling retail group, wobbled as NatWest Securities cut its profit forecasts.

The shares were at one time down 12p. They closed 5p lower at 460p.

NatWest's respected retail team has removed pounds 25m from this year's estimate and now expects pounds 275m. Next year's figure has been reduced by pounds 20m to pounds 320m.

The securities house is now at the bottom of the forecast range.

The well-signalled problems at B&Q, the group's do-it-yourself off-shoot, are responsible for the new NatWest stance. Besides the deep gloom in the housing market B&Q has also to contend with uncomfortably high stocks.

The DIY business has been forced to confront a multitude of problems, created by the low level of consumer confidence. Boots and WH Smith have suffered from the woeful performance of the Do-it-All network and there are worries J Sainsbury's takeover of Texas is going to have a telling impact on the supermarket's performance.

Kingfisher's latest discomfort comes in the wake of a low-key analysts' meeting. In January it caused dismay with a profit warning. Four directors have since departed with payoffs totalling pounds 2.7m.

The shares touched 774p as 1993 closed but were the worst-performing FT-SE 100 constituent last year.

The rest of the stock market fretted that the Ken and Eddie interest rate debate could be moving in favour of the Governor of the Bank of England's argument for higher rates following the latest Whitehall figures. Footsie fell 26.1 points to 3,441.4 although trading remained thin with much of the 545.5 million turnover made up of big trades in low-priced shares.

Still, a few shares glittered in the sea of indifference. Zeneca was one. The drugs group continued to shrug off the doubters, gaining 10p to 1,134p. The shares have risen 52p in just over a week with Goldman Sachs, the powerful US house, offering its not inconsiderable support.

But those who dismiss takeover possibilities do so at their peril. Unless it is allowed to grow Zeneca will fall victim to a takeover strike and Roche, the Swiss group, remains the market's favourite candidate.

Other blue chips higher included Williams Holdings, up 2p at 311p as Kleinwort Benson moved from hold to buy, and Cookson, up 3p to 258p, on the proposed sale of a US operation.

Southern Electric recaptured some of the ground lost on Friday following its somersault over its bid for South Western Electricity. The shares rose 10p to 741p. South Western lost 26p to 914p. Manweb fell 7p to 891p as bidder Scottish Power lifted its interest to 14.9 per cent.

Airtours dived 14p to 345p on the profit warning and the increasingly fraught Channel price war pushed Eurotunnel 7p lower to a year's low of 168p.

P&O also found the downward pull irresistible, sinking 11p to 554.

Fisons fell 3p to 194p as once again its agreement to sell its instruments division was extended. The sale, announced in March, has been put back to the end of next month. Smith & Nephew, with in-line figures and a denial of any takeover approach, lost 5p to 190p.

Scottish & Newcastle fell 4p to 598p as its controversial pounds 425m takeover of Courage was cleared and Grand Metropolitan lost 5p to 393p ahead of a meeting, due today, with analysts on its food division.

The suspicion the Scottish deal will lead to another takeover ferment among the regionals produced a smattering of gains with Greene King up 4p at 633p.

Hambros, the merchant bank regarded as the next financial takeover victim, fell 13p to 193p on worries over its Hambro Countrywide estate agents chain, down 2.5p to 29p.

Spring Ram, the bathroom and kitchen group, shaded to 24.5p with Smith New Court hanging a sale sign over the shares. It expects profits to fall pounds 2m to pounds 3.8m this year but recover to pounds 12.7m next. T&N gained 3p to 193p as GKN bid hopes continued to circulate.

Eurocopy, the office equipment group, added 3p to 87p. It could be the next business supplier to collect a bid.

The group revealed it had held talks that could lead to a bid. Berkeley Business, which failed to win Southern Business, is the favourite to pounce.

Last week Alco Standard, a US group, agreed the takeover of Copymore.

Farringford, the little leisure group thought to be near completing a reverse takeover, gained a further 1.5p to 11p. The shares have nearly doubled since Thursday.

Hobson, the food group, was actively traded. The shares shaded to 27.5p as Seaq recorded turnover at more than 31 million.

TAKING STOCK

o Cathay International, once a London furniture maker called Stonehill, has suffered a Chinese burn. Its shares have slumped from more than 70p to 18p, yet profits jumped last year from pounds 469,000 to pounds 2.76m and could top pounds 7m this year.

A growing unease over China and the company's once close relationship with Baring is thought to have hurt the shares. The group has property interests and two hotels in China.

It also plans to acquire four toll bridges.

o Voss Net, producing an on-line system for the exchange of purchasing information, made a lively AIM debut yesterday. The shares ended at 143p against a 116p price on the 4.2 market.

The company, the 26th AIM recruit, is raising pounds 648,000 through a placing and open offer at 130p.