A reduction in demand for commodities has started to filter through to the services sector around the world. Having first troubled this industry last summer, a new wave of problems have emerged, illustrated by a profit warning from one of Australia's leading engineers, WorleyParsons (WOR:ASX), whose shares dropped 12.5% to A$19.50 in Australia because of project cancellations and cost-cutting by resource clients.
London also had its fair share of companies blaming reduced demand from the mining sector. It is rare to see bad news from testing giant Intertek (ITRK), so today's warning of lower margins has spooked the market. The FTSE 100 constituent fell 4.9% to £32.82 after flagging weakness in its commodity testing arm because of reduced minerals activity.
Project delays and cut backs among the miners were to blame for an 11.3% share price decline to 23.5p at Capital Drilling (CAPD). The mining services business issued a grim trading update containing news of poor utilisation rates for its drill rigs and a warning that market conditions are getting worse. But there was a sigh of relief that fellow mining services group Shaft Sinkers (SHFT) hasn't experienced any new problems on the back of last month's decision to suspend the dividend amid operational and financial pressures. Its shares nudged up 0.3% to 36p.
Shares in Ocado (OCDO) rocketed 29% higher to 260.10p as the online grocer finally announced the details of its hotly-anticipated tie-up with Morrisons (MRW). First flagged up to the market in March, the deal will help the UK's fourth biggest food retailer launch online grocery deliveries by January 2014. Click here to read our story on the news.
Electronic components distributor Premier Farnell (PFL) highlighted a return to sales growth, sending its shares up 0.7% to 228.1p. Investment bank Espirito Santo reckons this is down to self-help measures 'as market conditions remain challenging.'
Rig manufacturer and refurbishment specialist Lamprell (LAM) fell 3% to 173.4p despite announcing in-line trading and confirming it was on track to restructure debt and agree revised covenants by the end of next month. The Dubai-based firm served up a series of profit warnings last year.
Oil services firm Kentz (KENZ) ticked up 1% to 393.3p after chairman Tan Sri Razali said he was 'excited about the future prospects' for the business in a statement accompanying its AGM.
John Menzies (MNZS) dipped 4.4% to 756.5p after flagging weakness in its magazine arm, prompting analysts to reduce earnings forecasts and investors to take profits after a strong run in the share price.
Shop fit-out specialist Styles & Wood (STY) fell 7% to 6.62p after warning that half-year profit would be 'significantly below the prior year'. It remains hopeful of hitting full-year market expectations.
Oil & gas producer Petroceltic (PCI:AIM) advanced 3% to 6.8p after delaying its move to the main market in order to finalise a second farm-out deal on its Isarene permit in Algeria.
PuriCore (PURI), a technology developer for the food and healthcare markets, dived 14.4% to 38.5p after its revenues fell 23.7% in the year-to-date. Its turnover stood at US$10.9 million compared to US$14.3 million the first quarter of 2012, a result of a 51% fall in supermarket revenues and a 4.9% drop in the endoscopy market. However, sales for its wound care treatment Vashe were up 188% to US$1.1 million.
Struggling drug research and development company Ark Therapeutics (AKT) declined 9% to 44p after failing to secure a buyer for the business. Management has been looking for an offer after aborting an institutional fund-raising in January due to a lack of interest. It has only managed to sell its subsidiaries to private equity firm Wölbern. In the year to January Ark made a £13 million loss, up from a £4.4 million a year earlier, while its cash fell to £2.1 million from £9.5 million in 12 months.
Shares in car dealer Pendragon (PDG) put on 3% at 24.75p on a positive first-quarter trading update. The £345.1 million cap's new car sales were up 16.7% for the quarter, demonstrating outperformance versus an 11.2% increase for the UK market, while like-for-like used car volumes were up 3.2%.
Moscow-focused warehousing company Raven Russia (RUS) improved 2.6% to 78p after agreeing pre-lets in its developments. Annualised net operating income was US$183.2 million, up from US$179.7 million and the back of rising occupancy to 97% from 95%.
African oil explorer Lekoil (LEK:AIM) has joined AIM today after raising £32 million through placing of 80 million new shares at 40p. The shares had dipped to 39p by midday.
