London’s FTSE 100 gives up 26.4 points to trade at 7,517 early on Thursday amid continued uncertainty around Spain and Catalonia and ongoing unpredictability over the direction of Brexit negotiations.

Interserve (IRV) slumps 35% to 59p as the support services and construction group warns of a 50% drop in second half operating profits and that it might breach its banking covenants. Interserve’s support services and construction businesses are both facing pressures which have been exacerbated by an inflexible cost base; the company is now launching a group-wide performance improvement plan to bring margin performance into line with industry norms.

PG Tips, Domestos and Dollar Shave Club brands colossus Unilever (ULVR) cheapens 3.1% to £44.08 on news of weak third quarter organic growth of 2.6%. This misses consensus expectations for 3.9% growth, Unilever blaming poorer weather in Europe and high competition and the impact of the hurricanes in Florida and Texas.

Reassuringly, key markets including India and China are improving and Unilever reiterates full year guidance for 3%-5% organic sales growth, implying confidence things will pick up in the fourth quarter, as well as an improvement in operating margins.

Hard landscaping manufacturer Marshalls (MSLH) is marked up 6% to 468.9p as investors welcome the £38.3m acquisition of CPM, a profitable pre-cast concrete maker with expertise in underground water management solutions. Peel Hunt reiterates its ‘buy’ rating on Marshalls and upgrades its price target from 450p to 490p.

Travis Perkins (TPK) perks up 2.6% to £15.10 on a better-than-expected third quarter trading update, like-for-like sales growth of 4.1% delivered despite a challenging market and the squeeze on household incomes and the builders’ merchant is on track to meet full year expectations.

Elsewhere, fantasy miniatures maker Games Workshop (GAW) marches 61p or 3% higher to £20.68 on yet another round of earnings upgrades. CEO Kevin Rountree says sales and profits are tracking well ahead of last year, positive sales momentum having continued since last month’s upbeat first quarter missive.

Serviced offices play IWG (IWG) sheds a third of its value, crashing 33% lower to 213.9p, on a warning operating profits will be materially below market forecasts as an anticipated improvement in sales in the third quarter proved weaker than expected.

IWG continues to invest in growing its national networks and in its development capabilities to establish a strong pipeline of growth in future years. However, in the short-term this will lead to additional overhead costs. IWG’s problems have been compounded by some weakness in London and disruption to other parts of its business globally from recent natural disasters.

Rathbone Brothers (RAT) remains in demand, the shares scurrying 10p higher to £26 following yesterday’s very solid third quarter update. This highlighted growth in funds under management – quarterly net inflows reached record levels – and a spike in operating income.


Issue Date: 19 Oct 2017