It’s been a week of extreme volatility for global stock markets with concerns spreading about the health of the world economy and the strength of European banks. The FTSE 100 has tanked almost 5% to levels not seen since July 2012, wiping off billions of pounds of value in the process, with grocery stocks not immune to the sell-off.
Tate & Lyle shares fell 7% to 532p on Thursday as it warned currency translations would hit full-year profits. The sucralose producer said underlying earnings expectations were unchanged at £193m, but sharp falls in the Brazilian real and Mexican peso meant adjusted pre-tax profits were likely to come in below this figure.
However, investment banks Société Générale and Liberum both upheld their ‘buy’ rating on the stock, with a target price of 700p, as the Q3 trading update pointed to continued progress toward the group’s recovery. Liberum analyst Robert Waldschmidt said: “Tate has turned the corner and FY16 is an inflection point. We forecast an 18% rebound in FY17 pre-tax profits as one-off items drop out and new capacity comes online.”
Shares in Dairy Crest also suffered following the group’s first trading update since the completion of its UK dairies disposal - falling 2% to 592.5p - despite the business reiterating its full-year expectations, with its cheese and spreads brands all “performing well” in Q3.
Darren Shirley of Shore Capital, which along with Peel Hunt is the new joint house broker, said flat sales in a deflationary market was a “commendable” performance. “With the group now setting its own agenda and increasingly in charge of its own destiny we see Dairy Crest as a multi-themed investment opportunity.”
Carlsberg shares fizzed on Wednesday - rising 4% - despite the brewer recording a net loss for 2015 of DKK2.6bn (£270m) as it restructured the group. Investors responded positively as Q4 sales came in significantly ahead of expectations on the back of strong growth in Asia, which overtook the troubled Eastern Europe business as the brewer’s second-largest segment by EBIT.
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