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Petrofac shares hammered after profit warning as FTSE dips

by Daniel Grote on May 09, 2014 at 10:59

Petrofac shares hammered after profit warning as FTSE dips

Shares in energy services group Petrofac (PFC) have dived after a profit warning, helping to drag the FTSE 100 off a 10-week high as concerns over Russia and the Ukraine persist.

Around £700 million was wiped off Petrofac's market value after the group warned that its profits would fall by as much as 11% this year. Petrofac shed 223p, or 16.1% to £11.65. The company, which designs and builds oil and gas infrastructure, blamed poor performance of its integrated energy services division, as it forecast profits of between $580 million and $600 million for 2014, down from £650 million in 2013.

Sage (SGE) dropped 9.9p, or 2.5%, to 389.6p, as the software group continued to shed value following the announcement of chief executive Guy Berruyer's departure and a trading update was judged downbeat by some analysts. Sage said it would require greater investment in cloud software development, prompting Numis to lower its forecasts.

British Gas owner Centrica (CNA) shed another 4.7p, or 1.5%, to 315.8p following yesterday's 'brutal' trading update. The update was brought forward to coincide with the announcement of the sale of £107 million of gas assets to its joint venture with Quatar Petroleum International. Liberum analysts Peter Atherton and Mulu Sun said the group was facing a 'perfect storm' both on the political and operational fronts.

'Operationally, with the possible exception of upstream oil and gas, all of Centrica's key business areas are facing challenging market conditions,' they said. 'Politically Centrica, and the sector in general, have been subject to considereable pressure in recent months and the uncertainty caused is likely to continue to at least the next general election in May 2015.'

Rollys-Royce (RR) retreated 4.3p, or 1.4%, to 998.5p after analysts at Barclays downgraded the engine maker from 'overweight' to underweight', predicting slow growth over the next two years.

The fragile situation in the Ukraine continued to weigh on investors' sentiment. Pro-Russia separatists in the east of Ukraine have ignored a call from Russian president Vladimir Putin to postpone a referendum on self-rule, declaring they will go ahead with the vote on Sunday.

The euro slipped further following European Central Bank president Mario Draghi's announcement yesterday that monetary easing could be launched as soon as next month. The single currency fell 0.24% to $1.3808 against the dollar. The pound dipped 0.17% to $1.6902 as the Office for National Statistics reported a fall in construction output and a drop in oil and gas extraction in March had been offset by a rise in manufacturing and a narrowing of the trade deficit.

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