Market Report: Smiths Group feels the benefit from new pension deal

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If an oil-services firm announced it had found a few quid down the back of the sofa, it would probably be applauded by the City, such is the current climate for the cash-strapped sector.

News that Smiths Group, whose John Crane US oil business generates around a third of its revenues, changed its pension-plan funding sent its shares on the way to their best day on the stock market for seven years, gushing 95.5p, or 10.3%, higher to 1021p.

The company struck a deal to contribute less cash to the scheme, freeing up an extra £36 million in free cash flow every year.

It came as Smiths said first-quarter trading remained “resilient”, in a solid start for new chief executive Andrew Reynolds Smith, who has so far avoided the profit warnings which plagued his predecessor’s final days in charge of the company.

Smiths said its detection business which makes airport scanners — an increasingly important part of the business in the wake of the Paris attacks — saw “good profitability growth”.

It was a similar story for peer Bodycote, which jumped 54.9p, or 11%, to 553p as the company stuck by its annual operating profit guidance of £101-£106 million.

The bulls grabbed London-listed stocks firmly by the horns, helped by a recovery from commodity prices, and hoisted the FTSE 100 up 102.46 points to 6248.84 as nervy trading was replaced by some assured bets on struggling sectors such as oil, mining  and industrials.

With some speculating that the so-called “Santa rally” is under way, when stocks typically rise in the run-up to Christmas, TalkTalk dropped off Société Générale’s wish list.

The phone and broadband provider, which is still recovering from last month’s cyber-attack, fell 3.52p to 238.48p as the French broker added the stock to its sell list and slashed its target price to 190p.

Investors dialled into Cable & Wireless Communications, 5.45p better off at 79.2p, after agreeing to an all-share, £3.6 billion takeover by Liberty Global, US billionaire John Malone’s cable giant.

Emergency home-repairs business HomeServe edged up 1.3p to 421.1p as it revealed half-year revenues grew from £241.7 million to £262.3 million, prompting a higher dividend of 3.8p a share.

On the junior market, ASOS rose 126p, or 4%, to 3263p as Barclays named the online fashion store its top pick.

ASOS’s 27% rise this year has powered the FTSE AIM 100 up more than 10% in 2015 — such is its influence on the benchmark small-cap index.

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November 17, 2015 |
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