Numis downgrades Fenner after profit warning

A profit warning from polymer products group and conveyor belt maker Fenner has prompted Numis Securities to downgrade its rating on the stock from 'add' to 'hold'.After the company revealed that annual results for the year ending August will be below forecasts owing to weakness in US coal, Numis said the shares "will continue to trade poorly until evidence of a recovery in its end market prevails".Fenner warned that underlying group profit before tax (PBT) for the year could be reduced by as much as 10-15% below the current consensus market expectation of £77.6m. This was partly due to what are expected to be "significantly weaker" than previously anticipated results from its ECS business in the US for the remainder of the financial year. That was on top of ECS's failure in a competitive tender for the supply of conveyor belts to an iron ore miner in western Australia, which it had previously expected to manufacture and deliver during the final quarter of the financial year. "These are clearly disappointing developments and demonstrate the continued challenging environment in its mining end markets," Numis said."Looking forward management is confident that the US coal market will recover given the structural demand/supply dynamics but the timing is uncertain."The broker has cut its current-year PBT estimate by 16% to £67m, which assumes no expected recovery in the US coal market "in the near future".The stock was down 12.7% at 340.24p by 09:50.BC