Shares in 600 Group, Britain’s biggest machine tools maker, crashed 50p to 149p on news from Colin Gaskell, the chief executive that the weak UK demand reported at the interim stage has continued, and that profits for the year to March would not be up to City expectations ofising to £14.5m pre-tax from £13.4m last time.
The problem has been compounded by a high build-up of dealers’ stocks, and Gaskell thinks that the revenue shortfall will not be made good until next year. Some analysts reckon next year’s profits will be no better than this year’s.
Even before this week’s setback the shares had fallen 50p from their level of last November. The company’s stock market value is now just half its 1996 peak.
Elsewhere, several majors improved. Vickers was up several pence on stories that its Rolls-Royce cars arm is to be demerged, and on tales of possible links with – or a bid from – GKN. GKN itself recovered strongly from a setback on the comment by broker Merrill Lynch that rumours of trading problems were nonsense and that the fall was much overdone.
Rolls-Royce, which had steadily fallen from a 1996 high of 270p to 229p – by investment bank Lehman among others – rallied 10p on news that Siemens is offering for the company’s troubled Parsons Generating Systems.
Babcock, whose shares are well off their 44p low since the improved interim statement, fell back to 68p on news that it would lose £8m of sales this year as a result of a postponed expansion by chemicals group Millennium.