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UPDATE 2-Cookson sees slower second-half
November 10, 2011 / 7:57 AM / in 6 years

UPDATE 2-Cookson sees slower second-half

* Cookson sees overall H2 performance slightly below H1

* Says signs of softening global steel production volumes

* IMI sees FY EPS in line; year-to-date sales up 10 pct

* Cookson shares down more than 5 pct, IMI drops 1.3 pct

By Adveith Nair

LONDON, Nov 10 (Reuters) - British industrial materials group Cookson said its second-half results would be hit by a slowdown in global steel production, particularly in Europe.

Cookson, whose products are used in the glass and solar industries as well as by steelmakers and foundries, said on Thursday its second-half performance would likely be slightly below first half levels.

“Global steel production in the third quarter of the year declined by some 2 percent compared to the second quarter,” the company said. “There have been recent signs of some moderate softening in steel production volume trends for the remainder of the year, particularly in Europe.”

The news sent its shares down 5 percent to 437.2 pence, making them the top percentage losers on the FTSE 250 index.

“Second-half performance is now expected to be slightly below first half when trading profit of 145.9 million were reported,” Singer Capital Markets analyst Jo Reedman said.

The analyst said that would imply a full-year result of less than 291.8 million pounds -- a downgrade versus consensus expectations.

“While the shares are already lowly rated, this is likely to further undermine investor confidence in the group’s near term prospects,” she added.

Cookson, however, said trading in its core Ceramics and Electronics divisions remained strong, and that full-year results would be substantially ahead of 2010.

Still, analysts at Brewin Dolphin said they would likely downgrade their full-year pretax profit estimates by 5 percent.

“It is disappointing to have to downgrade forecasts whilst the group’s core markets are performing in line with expectations,” they said.


Larger British engineer IMI also disappointed investors with its trading update, which one analyst said signalled slowing growth.

Shares in the company dropped 1.3 percent to 783.5 pence, after it said full-year earnings would be in line with estimates and reported a ten percent rise in year-to-date reported sales.

“Growth has declined in the second half versus tougher comparatives, and the 10 percent reported growth for the year to date appears light versus consensus expectations of 12 percent,” Singer Capital’s Reedman said.

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