Market Report: Kesa feels pressure to pull plug on Italian division

Suggested Topics

Could it be time for Kesa Electricals to bid arrivederci to Italy? Having recently managed to exit the UK by selling its struggling Comet chain for the nominal price of £2, yesterday the retailer was under pressure to get out of another European country.

It was UBS which was pushing the idea, as scribblers from the broker claimed that a closure of Kesa's loss-making Italian business should boost the company's earnings per share by a whopping 25 per cent.

The perilous situation in Europe could prompt Kesa to make such a move, they suggested, arguing that although "any further eurozone crisis will be unhelpful for short-term fundamentals it may act as the catalyst for a potential restructuring of the business".

At the same time, the analysts decided it was time to start snapping up Kesa's shares, changing their advice to "buy". The electricals group has fallen about a third since February, which, they pointed out, meant the stock was not much higher than the freehold value of 48p a share.

Saying this should "provide a fair degree of downside protection", they added that with "a market leading French brand, no liquidity issues and solid cash generation there is scope for both valuation and sentiment to recover." In response, Kesa pushed up 2.25p to 57.65p, although this is still less than half what it was trading at this time last year.

GDP figures may have shown the UK economy is in a double-dip recession, but that didn't stop the FTSE 100 creeping up 9.4 points to 5,718.89 ahead of last night's latest statement from the US Federal Reserve. This was despite a number of stocks trading ex-dividend, including the British Gas owner Centrica and the publisher Reed Elsevier, which slid 12.3p to 310.2p and 13.5p to 512.5p, respectively.

Arm Holdings powered above 557p in early trading, following fantastic figures from its major customer Apple late on Tuesday, with the US technology giant shrugging off Wall Street's concerns to reveal that its net profits in the first quarter had nearly doubled.

Chip designer Arm has been out of favour recently, having closed on Tuesday at an eight-month low after announcing first-quarter results. The fall prompted a number of analysts to pledge their support, including Numis Securities' Nick James, who said it was a "buying opportunity".

Nonetheless, Arm was unable to hold on to all of its gains, closing only 6p ahead at 537.5p, while fellow Apple supplier Imagination Technologies climbed 1p to 687.5p on the FTSE 250.

Vedanta Resources took the gold medal position, advancing 50p to 1,225p following full-year results from its Sterlite business. The miners were strong generally, with Bank of America Merrill Lynch claiming that the surplus capital of a number of the largest blue-chip diggers – including Rio Tinto (up 65p to 3,480p) and Anglo American (up 52p to 2,360p) – meantthey could return a large amount toshareholders.

With reports claiming that the German pharmaceuticals group Bayer is nearing a multi-billion euro acquisition, dealers' minds turned to Shire, which has often been suggested as a possible target. Nonetheless, the drugs maker still ended 10p weaker at 2,002p.

While Kenmare Resources said it could expand its Mozambique heavy sands mine, there was yet more takeover talk surrounding the Irish digger, which has been linked in speculation recently with a possible move from Rio Tinto.

The miner shifted up 2.15p to 51.9p on the FTSE 250 after market gossips suggested Brazil's Vale (which also operates in Mozambique) could be interested as well, although traders treated the vague rumours with a pinch of salt.

The news that Abu Dhabi's National Drilling Company has decided it wants another two rigs alongside four already being built pushed Lamprell higher, with the oil and gas services company ticking up 21p to 343.6p in response.

Premier Oil put on 10.1p to 378.4p after the driller's development plan for its Solan field in the North Sea was given the green light by the Department of Energy and Climate Change.

Meanwhile, fellow explorer Afren slumped 6.1 per cent to 134p as the Africa-focused company admitted its Nunya-1 exploration well off the coast of Ghana had found water.

Fairpoint was celebrating a windfall after the AIM-listed debt advice group revealed it had been refunded £9m in VAT by HMRC. In response, it charged up 7p to 71.5p, with the company also announcing an expansion of its credit facilities.

Elsewhere, Tracsis surged 14.6 per cent to 78.5p as the transport software maker revealed that its full-year profits should beat forecasts – the second time it has said so in little more than two months.

Independent Comment
blog comments powered by Disqus
Career Services

Day In a Page

The 50 Best beachwear

The 50 Best beachwear

The hottest summer gear for men and women
Still standing: George Galloway reveals why his staunchly Leftist outlook is still invariably right

Still standing: George Galloway

Written off, ridiculed, wrongly accused of taking bribes the honourable member for Bradford West, has never bowed to the critics.
How will Daniel Radcliffe's fans react to his latest turn - as a damaged, drug-taking Beatnik poet?

Daniel Radcliffe as drug-taking Beatnik poet

His decade as the boy wizard may be over, but that hasn't hexed Daniel Radcliffe's enchanted life.
For whom the bell tolls: £20m 'Memo' project takes shape on Dorset's Jurassic coast

'Memo' project takes shape on Dorset coast

It started as a stonemason's visionary idea – to commemorate all the species that have ever existed and are now extinct.
Just add sunshine: Bill Granger's Turkish delights

Just add sunshine: Bill Granger's Turkish delights

Turkish cuisine is perfect for those long, sociable weekend meals with friends. It's just a shame that money can't buy the key ingredient.
Objets czar: David Usborne’s collection of myriad objects is quite the mystery

Objets czar: David Usborne’s collection of myriad objects

To others, they're junk. To David Usborne, they are his life: useful gizmos, mysterious thingamajigs and anonymous articles that dominate his home.
The iron ore lady: Why the world's richest woman is mired in controversy

World's richest woman: Gina Rinehart

Family feuds, attempts to control the Australian media and bitter public disputes are keeping the mining magnate in the headlines.
We just click: How Lego keeps building on its success

How Lego keeps building on its success

This year, Lego announced record profits. Gerard Gilbert visits its Denmark HQ.
The other bits: Mark Hix creates delicious and economical meals with cheaper cuts of meat

Mark Hix cooks with cheaper cuts of meat

Our chef creates delicious and economical meals on a budget
Strokes of genius: How to create summer's bold make-up look

Strokes of genius: Summer's bold make-up

From coral lips to fly-away fringes, make-up artist Kim Brown and hair stylist Richard Scorer reveal how to create the look
Marking his territory: Kilian Hennessy creates fragrances designed to provoke the senses

Marking his territory: Kilian Hennessy

The perfumer creates fragrances designed to provoke the senses
Photo essay: Britain's 1948 Olympians today

Britain's 1948 Olympians today

Photo essay
The top five E3 2012 triumphs: From Ubisoft's suite of titles to Dishonored and The Last of Us

The top five E3 2012 triumphs

The games and moments that left us grinning like the Cheshire Cat
The green movement at 50: Can the world be saved?

Can the world be saved?

Population growth and climate change are the big problems facing the earth in the next 50 years. But are there any solutions?
France: Will xenophobia go mainstream?

France: Will xenophobia go mainstream?

In the beautiful Rhone delta, John Lichfield visits a village where a dangerous new political landscape is taking shape