MARKET COMMENT
Top Ten Profit Warnings Of 2003

By Stuart Watson (TMFTiger)
December 18, 2003

It's what every investor dreads: an unexpected trading statement is issued by one of your holdings and the share price plummets. Let's hope that you didn't have any of the following in your portfolio... here are the biggest one-day fallers from the FTSE 350 so far this year.

10. Matalan (LSE: MTN)  -26.3%, 18 March

This was the first, and largest, of three price slumps that the accident-prone discount retailer had this year. It also fell 14% in one day in early June, and 18% in a day just last week. In fact, this fall in March did not accompany a profit warning, but related to the departure of Paul Mason, who had been chief executive for just fifteen months. The group's retail director also left the company at the same time.

9. N Brown (LSE: BWNG)  -26.5%, 23 January

Shares in the mail-order group hit a nine-year low when it admitted it expected profits to be 5% below the previous year's figure. A marketing drive to boost flagging sales failed to 'do the business'.

8. De La Rue (LSE: DLAR)  -33.0%, 18 February

Now we move onto the serious fallers. De La Rue, the bank-note printer, sank by a third when it said profits would be 25% below expectations. Weak trading in Germany, following the completion of the changeover to the euro, was cited as the main culprit. However, the shares have steadily fought their way back since.

7. Corus (LSE: CS.)  -34.4%, 13 March

The first of two entries in this year's chart (as all good DJs would say!). Even more impressive is the fact that it came just two days after Corus's other entry (see below) - and on a day when the FTSE 100 rose by a stonking 6%! This was also the day before the company issued its full-year results. Still, Corus shareholders have had the last laugh. They closed at 4p on this day. Last night, they closed at 29.75p.

6. ICI (LSE: ICI)  -39.3%, 25 March

A shock warning that first-quarter profits would fall from £66m to £50m caused this collapse. It proved to be the undoing of Brendan O'Neill, who resigned as chief executive a few weeks later. It seems to have been the nadir for ICI shares though. They've doubled since, and even leapt 22% in a single day.

5. Expro Int'l (LSE: EXR)  -40.9%, 6 March

The relatively unknown oil explorer delivered a real shocker in March. Deferral of projects and tough trading conditions meant that second-half profits were expected to be half those of the first six months. For good measure, Expro threw in a second profit warning last month, causing a 20% one-day fall.

4. Invensys (LSE: ISYS)  -46.0%, 14 February

It was a Valentine's Day to forget for Invensys shareholders! The engineering company revealed that profits would slip by 25%. The group is still struggling, and recently admitted that it needed cash from its disposal programme to fund its working capital requirements for next year.

3. Britannic (LSE: BRT)  -49.9%, 6 January

The life assurer got 2003 off to a bad start with an absolute stinker of a profit warning, plus news that it wasn't going to pay a dividend. The shares have fought back since and, just today, the company announced that it would resume paying dividends, barring any unforeseen mishaps.

2. BTG (LSE: BGC)  -59.5%, 14 November

Curiously, this is the only entry on this list from the last nine months of the year, suggesting the worst of the stock market's falls of recent years have passed. It was, nevertheless, a spectacular late entrant and almost claimed the prestigious number-one slot. The technology company's troubles stemmed from US regulators delaying approval of Varisolve, which had been the firm's brightest prospect until that point.

1. Corus (LSE: CS.)  -64.3%, 11 March

Corus has been disappointing shareholders for years. 2003 was no exception, with the double-slide in mid-March coming after its Dutch supervisory board blocked the proposed sale of its aluminium business to Pechiney.  Despite its recovery from their March lows, the shares have lost over three-quarters of their value over the last thirteen years, which is as far back as our charts go.

So, there we have it. It's interesting to compare this list with last year's collection of horrors. In 2002, a fall of 57% was required to make the top ten. Since then, five of the ten have gone on to record gains of 100% or more, led by a nine-fold gain by WS Atkins (LSE: ATK). However, three firms have slipped further and one, Energis, has gone bust. Knife-catching remains a dangerous game to play!