Market report: G4S tipped to join the divi-cut club

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Could G4S cut its dividend and join the Footsie’s growing hall of shame?

Investors decided not to hang around to find out after broker RBC shaved 20p off its target price, now 210p, causing the security giant’s share slump to accelerate 12.8p, or 5.4%, to 223.4p.

Analyst David Greenall slashed his revenue and profit forecasts for next year with business still tough in the UK, where G4S is repairing its tattered image after a string of botched Government gigs.

Greenall reckons more redundancies could cost G4S as much as £20 million, having previously called an end to so-called “one-off” charges, arguing that the dividend is “barely covered by free cash flow”.

Seven blue-chip firms have cut their dividends this year, with Sainsbury’s the latest this week, following in the footsteps of supermarket rivals Tesco and Morrisons, embattled miners Glencore and Antofagasta, British Gas parent Centrica, and Asia-focused bank Standard Chartered.

Pearson, down another 24.5p to a new six-year low of 749.46p, is another company flagged by the City as a potential dividend-cut victim since its profit warning in October. That came just a couple of months after the sale of the Financial Times as Pearson focuses on education publishing.

The FTSE 100 continued to retreat, falling 21.03 points to 6157.65 after yesterday’s heavy losses at the hands of the commodities rout.

The nosedive continued for Rolls-Royce, down 17p to 519.5p, as the analyst downgrades rained in on the back of yesterday’s profit warning which sent the aircraft-engine maker 20% lower.

Miners were not on the receiving end of a beating for a change as metals prices picked up a touch, boosting Anglo American by 20.25p to 470.15p and Glencore by 2.91p to 98.83p.

Auto Trader shifted up 10p to 377p after the online, second-hand car dealer, which floated in March at 235p a share, improved first-half revenues by 8% to £138.2 million, with underlying operating profits up 17% to £83 million.

On AIM, Japan Residential Investment Company rocketed 17.39p to 72.02p after it shook hands with US private-equity firm Blackstone over a £152.6 million takeover, while a tie-up with Dell in Asia propelled big data specialist Fusionex up 17.5p to 370p.

Elsewhere, a dip in first-half sales to £27 million hit collectibles firm Stanley Gibbons, 10.5p poorer at 99.4p, as its profits were almost wiped out.

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November 13, 2015 |
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