Packaging makers were in the ascendant on Thursday as the FTSE 100 inched to a record-breaking 13th straight day of gains.
Mondi, Smurfit Kappa and DS Smith all hit record highs on hopes of an upturn in pricing. DS Smith and privately owned peers Hamburger and Schoellershammer, which together account for more than a quarter of the western European market for recycled containerboard, have said they plan to raise prices from February.
Containerboard prices have fallen over the past 12 months awaiting a glut of new recycling plants to come online, with the leading players failing to push through price increases in September. “Should the increase be successfully implemented it would provide material earnings upside for DS Smith and Smurfit,” said stockbrokers Goodbody.
Mondi advanced 5.6 per cent to £17.42 as Jefferies repeated “buy” advice. The shares trade at a discount to European peers in spite of “sector-leading returns and balance sheet optionality”, it said.
Smurfit closed 3.8 per cent higher at £21.53 and DS Smith took on 2.4 per cent to 435.1p in a mixed wider market, where Christmas trading updates provided the main focus. The FTSE 100 edged 1.88 points higher to 7,291.37, its 11th consecutive record-high close.
AO World, the white-goods retailer, lost 11.9 per cent to 162.3p after posting an unexpectedly sharp slowdown in UK sales growth. Primark owner AB Foods faded 4.5 per cent to £25.76 after its Christmas update showed store expansion in Germany and the Netherlands cannibalising sales.
Vodafone edged 0.6 per cent higher to 214.4p amid a retread of speculation about a spin-off of its UK business to Liberty Global, the owner of Virgin Media. The companies discussed potential combinations in Germany and the UK last year but could not agree on price, according to a source cited by DealReporter.
Spire Healthcare dropped 10.7 per cent to 308.3p after warning that the redevelopment of St Anthony’s private hospital in Sutton, which the group bought in 2014, was taking longer than anticipated. Problems with staffing levels mean the hospital will lose about £1.5m this year, against a profit of £5m in 2015, and will not be able to fully use the extra capacity until the second half of 2017, Spire warned.
Inmarsat slipped 5.1 per cent to 711.5p after Citigroup cut the satellite broadcaster off its “buy” list.
While Inmarsat has been investing heavily to target fast-growing demand for broadband from the maritime and aviation markets, visibility on the payback remains hazy with uncertainty over excess capacity and long-term yields, Citi said. It forecast a slide in core earnings this year and predicted that the group would “fall well short” of its 2018 target range.
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