Interserve Share News (IRV)

LONDON (Alliance News) - London's main stock indices dropped back from their record highs Wednesday, with the focus on individual stock news as the earnings season hit full stride.

In particular, shares in FTSE 100-listed oil services company Weir Group plunged after it warned it is preparing for a "significant reduction" in revenue and operating margins in 2015.

Weir Group closed down 8.8%, by far the biggest decliner in the blue-chip index. The oil and gas services company reported a slight drop in pretax profit for 2014 despite a rise in revenue to GBP2.77 billion from GBP2.27 billion that was driven by investment in new products. However, in 2015, Weir said it is expecting mining companies to reduce their capital expenditure budgets for the third consecutive year, with further reductions expected in both brownfield and greenfield developments.

It slashed its North American workforce by 22% in 2014 and made GBP46 million in procurement savings, and is targeting a further GBP20 million of savings in 2015.

Despite this, Weir Group raised its 2014 dividend to 44.0 pence a share, from 42.0p in 2013, which it said marked a 31st consecutive year of growth. It joins a growing list of companies in the resources sector, including BHP Billiton, BP, Royal Dutch Shell and BG Group that have protected, or even raised, dividends despite slashing spending plans and reporting falling earnings.

The FTSE 100 closed down 0.2% at 6,935.38. The index had reached a new record intraday high of 6,958.89 on Tuesday, and ended at a new closing high of 6,949.63, when it was boosted by the news of an agreement to extend Greece's bailout and by Federal Reserve Chair Janet Yellen saying US interest rates won't rise immediately even though there are signs the economy is continuing to improve.

The new high for the blue chip index had been a long time coming. Despite major indices in the US and Europe hitting fresh highs in recent months, the FTSE 100 had just surpassed a high it previously set at the height of the dot.com boom back in 1999. The FTSE 100 has a large number of resource sector stocks, which have been struggling due to the recent slide in prices of commodities like oil and iron ore.

The FTSE 250 also ended its run of nine consecutive session gains to close down 0.1% at 17,188.27. The AIM All-Share index closed down 0.3% at 709.46.

European stocks closed mixed, with the French CAC 40 ending down 0.1% and the DAX 30 slightly higher.

Wall Street was trading mixed at the London close, with the DJIA a touch lower, the S&P 500 slightly higher, and the Nasdaq Composite up 0.1%.

St James's Place closed as the best performer in the FTSE 100, up 4.3%. The wealth management and financial advice group made good on a promise to up its dividend by at least 40% due to a strong rise in its underlying cash results. The group said its operating profit on a European embedded value basis rose by 29% to GBP596.4 million in 2014, ahead of the GBP533.4 million forecast by financial analysts. EEV new business profit rose by 14% to GBP373.1 million. Its underlying cash result rose by 24% to GBP173.8 million, prompting a 46% rise in its dividend for the year as a whole to 23.30 pence per share.

Sky closed up 3.2%, the second best performer in the FTSE 100 after Citigroup added the broadcaster to its European Focus List.

Whitbread, up 2.7% was another top blue-chip performer. The hotel and coffee-shop chain operator reported like-for-like growth of 5.8% in the fourth quarter of its financial year, as its Premier Inn hotels and Costa coffee chain continued to grow sales and win UK market share, leaving the group confident of delivering full-year results towards the top end of expectations.

AO World shares plunged 32%, making it by far the worst performer in the FTSE 250. The online domestic appliances retailer issued a profit warning for its 2015 financial year owing to weaker-than-expected fourth quarter trading in its UK business. The company said its revenue growth year-on-year remains strong, but said it now expects its results for the financial year to the end of March to be slightly below market expectations due to weaker-than-expected revenue and earnings growth in its UK business.

At the other end of the index, Petrofac rose 8.7%, the biggest mid-cap gainer. The oilfield service company maintained its dividend for 2014 and its order backlog continued to rise, but it reported a drop in net profit for 2014 after a significant impairment charge and lowered its net profit target in 2015 to reflect the drop in the prevailing oil price. The company also said it has signed an agreement to form a strategic marketing alliance with US engineering and construction company McDermott International Inc to pursue opportunities together across a wide range of geographies.

NMC Health closed up 7.1% after Jefferies raised its price target on the company to 800.00 pence from 600.00p, maintaining its Buy rating. The stock ended trade at 557.50p.

Ithaca Energy, down 29%, closed as one of the biggest fallers in the AIM All-Share index. The company said it would book USD10 million in costs from a delay to the deployment of the floating production facility modification programme at the Greater Stella Area production hub in the North Sea. It said the work being undertaken to modify the floating production facility by Petrofac would not be completed in time to achieve sail-away for the vessel in the second quarter of this year.

In the economic calendar Thursday, the latest German unemployment rate is due at 0855 GMT, ahead of the UK fourth quarter GDP reading at 0930 GMT. The take up of the European Central Bank's targeted long-term refinancing operation will be announced at 1015 GMT. In the afternoon, there is US consumer price index at 1330 GMT alongside US durable goods orders.

In another busy corporate calendar, full-year results are expected from FTSE 100 constituents Royal Bank of Scotland Group, Capita, CRH, RSA Insurance Group, British American Tobacco, and Reed Elsevier.

Full-year results are also due from FTSE 250-listed companies Capital Counties & Properties, Howden Joinery Group, Ladbrokes, Interserve, National Express Group, Domino's Pizza Group, Playtech, Premier Oil, Derwent London, KAZ Minerals, Synthomer, Bodycote, Countrywide, Jupiter Fund Management, Merlin Entertainments, RPS Group and Kennedy Wilson Europe Real Estate.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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