Petra Diamonds profit warning, GKN pensions alert, SThree’s overseas jobs boost

“The FTSE 100 starts the week on a positive note, rising 10 points to 7,675. Miners and insurers are leading the charge, more than offsetting weakness in consumer goods companies,” says AJ Bell Investment Director Russ Mould.

Petra Diamonds

“There is no sparkle to Petra Diamonds’ shares as they collapse on news of a profit warning. The miner says 2018 earnings will miss market forecasts by 10% to 15%. It says lower diamond grades from its Cullinan mine are the principal reason behind guidance for reduced production in its current financial year. Earnings will also be hit by the strengthening of the rand.

“Petra has been dealt a number of blows over the past few years including the blocking of a consignment of diamonds by the Tanzanian government and lacklustre diamond prices. It has also had to endure additional pressure on earnings by having to extract lots of waste material pending a move to fresh sections of ore at several of its mines.

“All of these issues have forced Petra to be in regular contact with its lenders as it tests debt covenants. This has been going on for a long time, so it begs the question of how long its shareholders will stay supportive.

GKN

“Automotive and aerospace engineer GKN continues to mount a defence against its hostile takeover by industrial buyout firm Melrose. Melrose, which operates a buy, fix, sell strategy, swooped for GKN with a £7.4bn bid after the latter was hit by problems in its aircraft spare parts business.

“Pensions can often be a wrinkle in big acquisitions and GKN is appealing to its pension trustees to oppose the deal on the basis the level of debt of the combined entity would be ‘materially higher’ than as a standalone business.

SThree

“Specialist recruiter SThree continued the trend set by its peers as results for the year to 30 November saw a weak UK performance rescued by better trading overseas. The company, which focuses on sectors like science, technology and engineering, reported adjusted pre-tax profit for the 12 months to 30 November up 9% to £44.5m.

“Crucially, the outlook statement suggests the wider momentum in the business is continuing into the first weeks of its current financial year, backed by a strong showing in the US and continental Europe.”

These articles are for information purposes only and are not a personal recommendation or advice.