Rexam falls after rival’s profit warning

Can maker Rexam followed the London market sharply lower after a profit warning from a sector peer.

Rexam lost 1.9 per cent to 379p after Owens-Illinois, the world’s largest manufacturer of glass bottles, cut guidance because of disappointing demand and supply chain problems.

The US group cited a soft North American beer market, rising costs and the stronger dollar, which affected exports to brewers and wineries in Australia and New Zealand.

However, analysts suggested there was little that would affect Rexam, for whom drinks cans provided nearly four-fifths of group revenues last year.

“Rexam has no exposure to Australia and New Zealand and derives the vast majority of its US beverage can volumes from soft drinks,” said Merrill Lynch analyst Ross Gilardi.

“The beverage can business is primarily an automatic pass-through business. Therefore, we see very limited-to-no direct read-across.”

The wider market slipped back to a three-month low, with the FTSE 100 down 60.58 points, or 1 per cent, to 5,742.55. Risk aversion left miners and oil stocks among the biggest fallers.

Glencore slumped a further 5.4 per cent to 473p following Tuesday’s maiden results. Xstrata, Glencore’s only significant listed investment, slipped 2.6 per cent to £12.59p as confusion remained over what the latter’s reporting of lower than expected income from associates would mean for the former.

Banks also lost ground, with Barclays down 2.7 per cent to 257½p after Moody’s put three French lenders on negative watch over their Greek exposure.

Regulatory concerns sent Experian lower by 1.9 per cent to 785p.

A newswire report highlighted that credit information agencies operating in the US may face similar supervision to banks when regulation passes to The Consumer Financial Protection Bureau, a federal government agency.

Experian dismissed the report as old news, while analysts said the company had a long history of dealing with scrutiny. “Experian and rivals may eventually bear cost increases to drive changes,” said UBS.

“However, in previous instances, Experian and peers have passed regulatory costs straight on to their customers, given the oligopolistic characteristics of their industry.”

Tui Travel led the FTSE 100 risers, up 1.8 per cent to 215p. A 21 per cent decline in the stock since late January has rekindled speculation that Tui, its parent company, would move to take full control. However, with Tui apparently struggling to sell or spin off its Hapag-Lloyd shipping business, traders said the talk still looked premature.

Equally sketchy gossip of private equity interest helped squeeze Whitbread 0.6 per cent higher at £15.36.

Spectris, the instrumentation maker, rose 2.1 per cent to £15.81 after Singer Capital Markets started coverage with “buy” advice and a £18.80 target. It said the shares traded at a material discount to other electronic equipment makers even on relatively undemanding earnings forecasts.

Fellow electronics maker Laird rose 1 per cent to 137p on the back of “overweight” advice from JPMorgan Cazenove.

“We view Laird’s current share price as an attractive entry point and believe that the core business and recent accretive acquisitions are undervalued,” said JPMorgan. “We expect exposure to Nokia to continue to decline, leading investors to focus on the core business and recent acquisitions rather than the handset antennae business.”

ITE Group, the Russia-focused conference organiser, dropped 6.7 per cent to 22p after brokers picked up on news that a smaller rival had launched Buildex, a trade show for the building industry in direct competition to ITE’s Mosbuild Expo. Mosbuild provides around a quarter of ITE’s profit, according to Investec, which downgraded the stock to “hold”.

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