WINNERS & LOSERS SUMMARY: Profit Warnings Crush Pearson, Premier Foods

LONDON (Alliance News) - The following stocks are the leading risers and fallers within the main London indices on Wednesday.
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FTSE 100 - WINNERS
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Hikma Pharmaceuticals, up 1.8%. The Jordanian drugmaker said its Roxane Laboratories subsidiary in the US has received approval for its sodium oxybate oral product. The product is the generic equivalent for Xyrem and is indicated for the treatment of cataplexy, the sudden loss of muscle strength, and for excessive daytime sleepiness in patients with narcolepsy. Xyrem's owner, Jazz Pharmaceuticals, reported net sales of the drug of USD955.0 million in 2015.

Intercontinental Hotels Group, up 1.2%. The Holiday Inn, Crowne Plaza and Staybridge Suites hotel chains parent was raised to Hold from Reduce by HSBC.
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FTSE 100 - LOSERS
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Pearson, down 27%. The education publishing company withdrew its operating profit target for 2018 and warned on its outlook for 2017, though it said its results for 2016 will meet its expectations. Pearson said its operating profit for 2016 will meet its guidance, despite an "unprecedented decline" in its North American higher education courseware business in the fourth quarter of the year. In addition, Pearson said it will continue to reshape its overall portfolio and will serve notice to German partner Bertelsmann that Pearson will sell its 47% stake in the Penguin Random House book publishing joint venture. The proceeds from this will be used to boost Pearson's balance sheet and to make further investment in its core education business. Pearson's profit warning comes as no surprise to Liberum, which believes the measures taken to turn the tide on its core weakness are "too little, too late".

Experian, down 2.0%. The credit and business information group said its full-year guidance remains unchanged after delivering third-quarter revenue growth in line with previous guidance. The company reported total revenue grew by 4% year-on-year in its financial third quarter to December 31, or 6% at constant exchange rates. Experian said the weakness in sterling offset improvement in the Brazilian real to cause a headwind to revenue growth, as Experian reports in dollars. Experian's year-on-year organic revenue growth was 4% over the quarter, at constant exchange rates. The company said this was in line with previous guidance of "mid-single digit" organic revenue growth.
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FTSE 250 - WINNERS
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Ladbrokes Coral Group, up 3.7%. The newly-merged bookmaker said it expects profit in 2016 to increase in line with market consensus and management expectations, despite seeing poor sporting results in the second half of December. Betting giant Ladbrokes, which last year bought rival Gala Coral, said proforma group operating profit will be in the range of GBP275 million and GBP285 million in 2016, comprising GBP101 million at Ladbrokes and GBP179 million at Coral. This compares to a proforma group operating profit of GBP235 million in 2015, comprising GBP80.6 million at Ladbrokes and GBP154 million at Coral.

JD Wetherspoon, up 2.0%. The pub chain reported growth in sales in the first 12 weeks of its second quarter, and said it expects a "slightly improved trading outcome" for the full year despite remaining "cautious" on the second half. The company said like-for-like sales in the 12 weeks ended January 15 rose by 3.2% year-on-year, while total sales grew by 0.7%. For the first half on the whole, which ends on January 22, Wetherspoon expects its operating margin before exceptional items to be around 8.0%, which is a 1.7 percentage point increase on the prior year.

Hochchild Mining, up 1.4%. The gold and silver miner said it beat its production target in 2016 to hit a new record level of output, helped by outperformance from the Inmaculada mine in Peru, as the company said growth should continue this year. The miner, operating in Peru and Argentina, said the Inmaculada mine performed better than expected during its first full year of operation, producing 16.9 million silver equivalent ounces, or 229,000 ounces of gold equivalent. That helped to push overall production in 2016 to 35.5 million silver equivalent ounces, nearly one-third higher than the 27 million ounces produced in 2015. On a gold equivalent basis, production rose year-on-year to 479,600 ounces from 365,400 ounces.
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FTSE 250 - LOSERS
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Mitie Group, down 7.1%. The facilities management and outsourcing firm said it has booked further one-off charges on the contracts on its books, a move which will take another lump out of the firm's profit for its current financial year. Mitie issued a profit warning in September, hit by less high-margin work for its facilities management business and by the impact of a local authority budget squeeze on its units handling maintenance work and homecare services for local councils. "Shares in Mitie Group aren’t looking so mighty this morning, chalking up losses of up to 17% to make them the worst performer on the FTSE 250, eclipsed only by blue-chip Pearson. Both companies are wearing yet another ugly profits warning (both on their third since September) that merely adds insult to injury for loyal holders," said Mike van Dulken, head of research at Accendo Markets.

Inmarsat, down 5.1%. JPMorgan downgraded the mobile satellite communications services provider to Neutral from Overweight.

Thomas Cook Group, down 2.3%. Nearly 1,000 holidaymakers on the travel operator's packages in Gambia are to be flown home amid growing concerns about political unrest in the west African nation. Thomas Cook said it had triggered contingency plans after the UK's Foreign Office urged Britons to avoid all non-essential travel to the winter destination. A 90-day state of emergency has been declared in the country where political deadlock has led to a "high" risk of military intervention and civil disturbance, the FCO said. The country's president, Yahya Jammeh, has refused to hand over power after losing an election and on Tuesday banned "any acts of disobedience" while urging security forces to maintain order.
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MAIN MARKET AND AIM - WINNERS
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Fitbug Holdings, up 136%. The digital wellness technology provider said it has won a new contract with a global financial services group in Asia. According to Fitbug, the customer will use Fitbug's digital wellness services to help maximise employee performance for its 14,000 employees, with a focus on improving employee engagement, reducing absenteeism and risk of chronic illness. The corporate wellness programme will initially run for one year, including ongoing service revenue, together with an order for 14,000 devices. Fitbug said the client wishes to remain anonymous.

Blenheim Natural Resources, up 60% at 0.634 pence. The miner said it has secured an option to buy a stake in a lithium project in Mali and has raised funds via a placing to back the deal. Blenheim has agreed an option to buy a 30% interest in the Dieba exploration permit in southern Mali, which is located close to the successful Bougouni lithium project run by Birimian. It will have the option to acquire the stake for GBP175,000 in cash and 60.0 million shares under an option exercisable until the end of February. Blenheim paid GBP25,000 for the option. Blenheim also said it has conditionally raised GBP750,000 via the placing of 214.3 million shares at 0.35 pence a share.

Midwich Group, up 21%. The audio-visual and document services distributor said its results for 2016 are set to outpace its previous expectations. The group said it saw good trading momentum in the second half of 2016 and has benefited from the continued weakness in the pound. Growth was seen across its divisions, particular overseas, while the Holdan UK broadcast technology business it bought in September has outperformed. As such, Midwich anticipates revenue in 2016 of around GBP370.0 million, up 18% year-on-year, in addition to improved gross margins. This will mean its adjusted pretax profit, stripping out the cost of its London listing in May, will be "comfortably" ahead of its prior expectations.
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MAIN MARKET AND AIM - LOSERS
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Premier Foods, down 15%. The food manufacturer said it suffered weak sales in the third quarter of its financial year and trimmed its trading profit expectations by 10%. Premier Foods said the majority of its brands, which include Bisto gravy, Homepride cooking sauces and Mr Kipling cakes, grew their market share in the quarter to the end of December, but overall sales were down 1.0% for the period. This is despite sales in December rising 4.5%, the company said. As a result, Premier Foods anticipates trading profit for the year to the end of March 2017 will be around 10% lower than previous expectations. The weak sales and higher costs in its financial third quarter has prompted led to a downgrade to Sell from Hold by Shore Capital.
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By Arvind Bhunjun; arvindbhunjun@alliancenews.com; @ArvindBhunjun

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