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Risk Warning
28/10/2010
Chancellor George Osborne appeared to have claimed another victim this morning as austerity fears hit Mouchel Group.
The engineer's plunging share price was the big story among the smaller caps this morning.
The falls reflected fears that the company, which maintains highways and provides consultancy for local authorities, might be hit by the government's budget cuts.
Chief executive Robert Cuthbert struck a cautious note in the company's results statement:
Trading in the current year has started more slowly than expected and the immediate outlook remains uncertain. Whilst we expect to see some improvement in the second half of 2010/11 as cost savings impact, in these circumstances it is right that the Group takes a more cautious approach to performance through 2011 and perhaps beyond.
The numbers showed a loss before tax of £14.7m, down slightly on last year's loss of £13.5m.
Richard Curr, head of dealing at Prime Markets, said:
With falling sales, increased losses, a slashed dividend and a poor start to the current year, Mouchel Group is currently mired in the middle of a seemingly perfect fundamental storm. The management have expressed long term confidence, which is encouraging, but while all fundamental and technical indicators point to falling metrics, the shares of the group stand out as a compelling short sell. Prime Markets are sellers to 80p and below, and also on any near term strength going forward.
The shares fell 25% to 92p.
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.