Market Report: Profit warnings take their toll

ANOTHER ROUND of profit warnings eroded stock market confidence. Although corporate action, real and rumoured, should have been strong enough to keep shares on their toes, Footsie ended 51.4 points down at 6,033.6.

Imperial Chemical Industries, once the bellwether of Britain's industrial health, now one of the index's Cinderella constituents, bucked the trend.

The shares enjoyed a late run, climbing 27p to 513.5p, with talk of US interest exciting the market.

At least one leading transatlantic investment house was said to be keen on the shares, prompting speculation that a predatory strike is planned.

ICI has been reshaped, but the exercise has not gone smoothly. Last spring the shares hit 1,244p as the market anticipated a smooth transition from bulk to speciality chemicals. The group has since had a torrid time, with its failure to clinch sales of unwanted operations causing concern about its debt mountain.

It was another busy session, with share turnover topping 1.2 billion. At one time Footsie was up 55.3 but the flow of unsettling trading statements and then a weak New York display took their toll. Supporting indices weakened and Government stocks incurred falls of up to 45p.

Allied Domecq, the pubs and spirits group, lead the retreat. The long- time under-performing blue chip once again disappointed its followers as it rolled out a profits warning, blaming poor pub sales and slack demand in Latin America. The shares led Footsie lower with an 81.5p (after 92.5p) fall to 516p.

The Allied shockwaves were felt at Bass, down 74.5p at 805p, and Scottish & Newcastle, 25.5p at 713p.

The Old English Pub Co increased the brewers' droop when it announced disappointing sales, blaming, among other influences, the flu bug. The shares, although ABN Amro is thought to be holdings its year's profits forecast at pounds 9.1m, fell 48p to 262.5p.

Kingfisher produced a comfortable trading statement but the shares fell 25p to 624.5p; JJB Sports slumped 38.5p to 249p after warning profits would be towards the lower end of estimates, say pounds 41m, against hopes of pounds 48m.

On the under-card, trading comments became increasingly cautious. Furniture maker Cornwell Parker dipped 5p to 57.5p on a profits warning and Riva, a software group, plunged 11p to 21p after saying profits would be around pounds 700,000, down from pounds 1.3m.

Scottish Highland Hotels, down 4.5p at 80.5p, was another casualty of downbeat comments. Chemical group Ellis & Everard also joined the trading gloom, falling 17.5p to 201p.

But fashion discounter Matalan added 17p to 369.5p after offering a round of Christmas trading cheer, and Dixons, figures today, surged a further 33p to a 914p peak.

On the corporate front General Electric Co was again to the fore, up 15p to 564p, on French reports that it could agree a merger with Thomson- CSF by the end of the month. Vickers shaded 2.5p to 164.5p after confirming rumours of a tank link with the state owned French group, Giat.

First Leisure Corporation also confirmed it was in talks, although it seems a bid is not on the agenda and the shares fell 8p to 224p.

Airtech, an electronics group, is in talks which could involve a merger, and the shares added 8p to 35.5p; Dudley Jenkins, a mailing list supplier, jumped 67.5p to 560p after signalling a possible 680p offer, and IT company Division, confirming an approach, hardened 1p to 33p.

Wolverhampton & Dudley Breweries, defending a Pac-Man attack from Marston Thompson & Evershed, fell 25p to 465p; Marston lost 6p to 291.5p.

Mirror, the newspaper publisher, firmed 3p to 169p on suggestions of institutional pressure for a merger with Trinity, the provincial newspaper producer, up 10.5p to 439p.

Tesco, 9.5p stronger at 185.5p, was supported by Deutsche Morgan Grenfell comments, but British Airways failed to hold an early gain, ending 6p off at 396.5p after HSBC, bearish for five years, decided the shares were oversold. The airline has been hit by a barrage of profit downgradings and the failure of its link with American Airlines to materialise.

Coca-Cola Beverages was flat, off 3p at 112p, as CSFB cut its price target from 165p to 140p. Lasmo, in talks with Enterprise Oil, gave up 2p to 104p although Salomon Smith Barney put a 170p target on the shares.

Shire Pharmaceuticals rose 29p to 455p following a US investment presentation and KS Biomedix slipped 3p to 296.5p after duly reporting positive trials on its osteoarthritis treatment.

Alba, a domestic appliance group which is Britain's largest supplier of televisions, gained 3p to 189p after Henderson Crosthwaite said buy, suggesting profits of pounds 14.5m this year and pounds 16m next.

Property group Greycoat held at 190p. Delancey Estates has lifted its stake to almost 13 per cent. Versalite, duly confirmed it may sell off its specialist glass painting business and hardened 0.25p to 1p.

SEAQ VOLUME: 1.2 billion

SEAQ TRADES: 77,273

GILTS INDEX: 115.17 -0.81

ASK CENTRAL, the latest Kaye family restaurant venture which lifted its chain from 30 to 50 last year and plans to open another 20 this year, firmed 5p to 372.5p. It enjoyed good festive trading. Interim profits were sharply higher and the market is looking for pounds 3.7m for the year just ended against pounds 2m. Ian Berry at stockbroker Beeson Gregory expects pounds 5.4m for this year.

SHARES OF Environmental Property Services, the property services arm of the old Dean Corporation, are riding at an 8.75p high but are still undervalued, says stockbroker Teather & Greenwood.

Outsourcing of property maintenance is a growth area and analyst David Taylor says EPS is well placed to grow. Profits for 1999 should be around pounds 1.52m with pounds 1.72m next year.