Shares round-up: housebuilders, Cineworld and transport

Housebuilding companies give shelter to investors, as does pet retailer and homeware brands.

Housebuilders provided some shelter for investors today after a session in which many of the UK shares hit hardest by the coronavirus found themselves back on the ropes.

A tech-driven sell-off on Wall Street provided the trigger for the FTSE 100 index to surrender a chunk of the recovery built over the two sessions since Monday's hefty slide in values.

Tesla (NASDAQ:TSLA) backer Scottish Mortgage (LSE:SMT) was among the casualties after falling 3%, while heavily-sold BA owner International Airlines Group (LSE:IAG) and Rolls-Royce (LSE:RR.) both gave up 4%. Smiths Group (LSE:SMIN) topped the fallers board after its half-year results.

The industrial conglomerate posted a 23% slump in profits to £327 million and went on to disappoint investors by not offering any guidance on profits for the rest of the year. The dividend was cut by 24% to 35p, sending shares down 7% to 1,330p.

There was better news for followers of the housebuilding sector, with sentiment boosted by Chancellor Rishi Sunak's latest multibillion package of support for the UK economy.

Hopes that the measures will prop up demand contributed to builders occupying the top four places on the risers board as Persimmon (LSE:PSN) rose 4% and the trio of Barratt Developments (LSE:BDEV), Taylor Wimpey (LSE:TW.) and Berkeley Group (LSE:BKG) all gained 2% or more.

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There were contrasting fortunes in the FTSE 250 index after Pets at Home (LSE:PETS) and National Express (LSE:NEX) charged ahead 20% and 9% respectively, while Cineworld (LSE:CINE) skidded another 13%.

The movies chain spooked investors by warning it would probably need to raise additional liquidity to survive a tightening of restrictions in response to a Covid-19 second wave.

It has re-opened 561 out of 778 sites since the original lockdowns, but the severe impact of these closures meant it reported losses of around £1.3 billion in today interim results.

Chief executive Mooky Greidinger said:

“Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema - with high quality screens and best-in-class sounds - to watching it at home.”

But with Cineworld still in need of covenant waivers from its banks for December and June 2021, the uncertain outlook left shares at 42p and their lowest level since mid-August.

In contrast, shares in Pets at Home galloped ahead after the retailer boosted full-year results guidance thanks to a double-digit surge in like-for-like sales in the eight weeks to 10 September. The chain added that its balance sheet and liquidity position also remained strong, prompting shares to set a new all-time high at 370.2p.

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National Express was next in line on the FTSE 250 index risers board after revealing it had traded slightly above its previous expectations as passenger numbers show encouraging signs in the UK, Spain and North America. Tight cost controls have also driven positive underlying earnings and cash flow, leading shares to rally 10% to 137.6p.

There was also improvement for shares in fellow transport operator Go-Ahead Group (LSE:GOG) after its full-year results highlighted the resilience of its London bus business, which made an operating profit of £48.5 million and is expected to achieve a similar level in this financial year.

About 90% of Go-Ahead's revenues are secured through contracts with no risk from changes in passenger demand, meaning that its rail division should also break even this year despite the prospect of a prolonged period of working from home. Shares rose 5% to 667.5p.

Among smaller stocks, Portmeirion (LSE:PMP) put in a strong performance as the business behind the homewares brands Spode and Royal Worcester signalled a potential return to dividends.

It reported a £2.7 million loss today after underlying sales fell 20% in the first six months of the year. However, shares gained 8p to 376p on the company's hopes for a return to profitability in the second half, as well as its forecast of dividend payments next year as long as more normal trading conditions continue.