LONDON (Alliance News) - UK stocks quickly gave up a modestly higher open on Thursday to be mostly lower a half hour into trade with the focus very much on the US Federal Reserve's interest rate decision after the London market close.
In the FTSE 250, Rotork shares tumbled 14% after it issued a profit warning. The actuator and flow control products manufacturer said project delays and cancellations are set to push its revenue lower for the full year 2015 and will leave its adjusted operating profit falling short of its 2014 numbers.
The company, which has been hit hard in recent months due to its exposure to the struggling oil and gas industry, said that while it has seen an encouraging amount of quote activity and though it has a strong pipeline in place, the timing of orders and product deliveries remains tough to forecast.
Rotork now expects its revenue for 2015 to be between GBP530.0 million and GBP555.0 million, down from GBP594.7 million in 2014, while its adjusted operating profit will be GBP120.0 million to GBP130.0 million, down from GBP157.2 million.
Another heavy faller early Thursday was Premier Farnell, down 11%, after it rebased its dividend, slashing its interim payout by 41%, as it reported a fall in pretax profit for its first half, and said it will sell its Akron Brass business as part of an ongoing operational review.
The company, which will be relegated from the FTSE 250 next week, began an operational review in July after it issued a profit warning, and as part of this review said Thursday it will sell Akron Brass and cease direct operations in Brazil due to sub-optimal returns and high costs of operations.
In August Chief Financial Officer Mark Whiteling moved into the role of interim chief executive, replacing Laurence Bain, as the company cited a need for a change in leadership after recent disappointing results.
Among midcap risers, Ocado Group shares were up 6.2% after Deutsche Bank upgraded its to Hold from Sell, while Serco Group shares were lifted 4.3% after Berenberg upgraded it to Hold from Sell.
Phoenix Group Holdings confirmed a press report that it has entered into talks to acquire rival Guardian Financial Services.
The FTSE 250-listed closed life funds consolidator said it has been evaluating a bid for Guardian as part of its strategy to run the rule over the potential acquisition opportunities in its markets, as flagged in its interim results in August. The company's shares were up 3.1%.
Merlin Entertainment was one of the worst performers in the FTSE 100, trading down 1.0%. The theme park operator and attractions operator reported growth in revenue in the first 36 weeks of 2015 as a good performance by Midway Attractions and LEGOLAND Parks offset a decline at Resort Theme Parks after the rollercoaster accident in June.
The company said that group revenue in the 36 weeks ended September 5 grew by 2.2%, or 0.3% on a like-for-like basis. Of this, Midway Attractions registered revenue growth of 6.5% and LEGOLAND Parks saw a 9.2% rise, but Resort Theme Parks suffered a 13.2% decline in revenue following the accident at Alton Towers in June in which a rollercoaster crash left several riders seriously injured.
In the AIM All-Share index, Crawshaw Group, up 11%, said that like-for-like sales grew strongly in its most recent financial quarter and that it now expects to exceed market expectations for the full year.
The fresh meat and food-to-go retailer said that like-for-like sales growth was achieved across the entire estate following various initiatives undertaken by new management, and that it also strengthened its gross margin.
Investment company Teathers Financial was up 7.9% after it said its Teathers Financial Software unit has signed content licensing agreement with Proactive Investors, the news and events management company. Under the terms of the deal, Teathers' crowd equity app will carry multimedia content provided by Proactive Investors.
The FTSE 100 index traded flat at 6,227.43, the FTSE 250 was down 0.2% at 17,028.11 and the AIM All-Share traded flat at 738.34.
In Europe, the French CAC 40 index and the German DAX 30 were both down 0.1%.
Asian stocks largely reversed earlier gains, with the Nikkei 225 closing up 1.4% but with the Hang Seng down 0.7% and the Shanghai Composite down 2.1%.
The focus for market participants for much of the last few months has been the debate on whether the Fed should raise interest rates in September. Analysts at Deutsche Bank said future markets imply a probability of 30% that the Fed will start hiking interest rates in the current meeting and a probability of around 60% for a rate hike by the end of the year.
Commerzbank said that the situation is extremely unclear and said many market commentators still expect a rate hike.
"In the end what makes me think a rate hike is unlikely is the surprise effect. Even though the situation on the financial markets (above all in China) has improved notably recently, why should the Fed take the markets by surprise thus risking renewed turbulence?" Commerzbank said. "It could have simply increasingly sent out signals that it was going to hike rates today. The fact that it did not makes a rate hike unlikely."
Analysts at Nomura stuck to their prediction of a December rate hike due to the uncertainty surrounding the inflation outlook and the evolution of financial conditions going forward.
"That said, a September lift-off is still on the table as economic data have been more solid and some [Federal Open Market Committee] participants still seem confident that inflation will evolve in line with their outlook," Nomura said.
The Fed's decision will be announced at 1900 BST and will be followed by a press conference at 1930 BST.
Also in the economic calendar, UK retail sales are due at 0930 BST, while eurozone construction output is expected at 1000 BST. In the US, before the Fed monetary policy decision, there are initial and continuing jobless claims due at 1330 BST, while the Philadelphia Fed Manufacturing survey is due at 1500 BST.
The Swiss National Bank kept its key interest rates unchanged, in a decision announced early Thursday.
By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1
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