MARKET REPORT: Dechra profit warning drags shares down 9%

Dechra Pharmaceuticals tumbled after the animal medicine maker issued a profit warning on the back of ‘unpredictable’ trading.

The FTSE 250 company, which makes drugs to treat pets, said annual profit would be at the lower end of analyst estimates at around £188million.

The warning came after US wholesalers reduced inventory levels by using existing items rather than buying new ones.

Profit warning: Dechra Pharmaceuticals, which makes drugs to treat pets, said annual profit would be at the lower end of analyst estimates at around £188m

Dechra said the first half of its financial year – the six months to the end of December – was ‘robust’ with revenues up 13.5 per cent to £377.4million. But profits fell 3.8 per cent to £90.3million. Shares plunged 9.2 per cent, or 286p, to 2818p.

Analysts at Liberum issued a vote of confidence and said they are ‘seeing the outlook on pet spending improving’.

The FTSE 100 gained 0.7 per cent, or 56.45 points, to 7935.11 and the FTSE 250 grew 1 per cent, or 189.57 points, to 19886.1.

Bunzl made a bright start to the week after it agreed to buy the German business Arbeitsschutz-Express and sealed the acquisition of Capital Paper in Canada.

The blue-chip company, which supplies products such as paper napkins, disposable coffee cups and latex gloves to private business and the public sector, bought 12 companies for £322million in 2022.

Revenue surged 17 per cent to £12billion last year while profit soared 11.6 per cent to £634.6million.

Bunzl increased its dividend for the 30th year in a row.

It also reiterated its forecasts for 2023, with revenue expected to be slightly higher than 2022. Shares rose 2.5 per cent, or 75p, to 3088p.

Stock Watch – Directa Plus 

Directa Plus hiked its annual revenue forecast following a strong end to last year.

The graphene producer had expected to report revenues of at least £8.8million for 2022.

But it now expects revenue for 2022 to have increased by 25 per cent to at least £9.5million.

Business has continued to trade well, with about £7.75million of orders already secured for this year. 

Boss Giulio Cesareo said Directa had entered 2023 ‘in a solid position’. Shares gained 10.1 per cent, or 8p, to 87p.

Investors in Rolls-Royce will have much to cheer in what has been a remarkable start to 2023. 

Shares are up more than 50 per cent so far this year as the jet engine maker continues to catch the City’s attention. 

Jefferies raised the target price to 170p from 125p, while Bank of America upgraded them to ‘buy’. Shares added 6.6 per cent, or 8.96p, to 145p.

The boss of Senior, which counts Rolls-Royce, Airbus and Boeing among its customers, said the ‘airspace recovery is in full swing as a consequence of people wanting to fly again’.

The upbeat outlook came after the aerospace and defence group reported a profit of £20.1million for 2022, having made a loss of £1.9million a year earlier. 

Its annual profit beat the £16.2million to £18million range that analysts had expected. Shares advanced 6.8 per cent, or 11p, to 173.4p.

There was also good news for DX shareholders after the delivery and logistics firm said it would pay a dividend for the first time in six years. 

Investors will pocket an interim dividend of 0.5p per share after business improved. Revenue rose 15 per cent to £231.3million for six months to December 31 while profit jumped 176 per cent to £9.1million. Shares grew 2.7 per cent, or 0.75p, to 29p.

Trainline, meanwhile, surged 5.2 per cent, or 12.8p, to 258.8p after Deutsche Bank Research lifted the ticket seller’s rating to ‘buy’ from ‘hold’.

But Quilter sank 2.8 per cent, or 2.7p, to 92.92p after Citigroup downgraded the wealth manager to ‘sell’ from ‘neutral’ and cut the target price to 75p from 100p.

A company backed by David Beckham secured a contract with Samsung only a month after it launched its new studio.

Guild Esports, which manages teams that compete in video game tournaments, said its studio added a new revenue stream.

The former England and Manchester United football captain owns 24.57m shares with his 4.74 per cent stake in Guild. 

Boss Jasmine Skee said: ‘Creating new revenue streams and generating value for investors are the company’s key objectives for 2023.’

Guild shares shot up 8.1 per cent, or 0.08p, to 1p.