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London's FTSE hit by GSK's warning

Wednesday, July 23 17:03:33

A profit warning by heavyweight drugs firm GlaxoSmithKline took the shine of Britain's top equity index today, offsetting gains in outsourcing group Capita and miner BHP Billiton.

Shares in GSK fell 4.7 percent, their worst drop since 2008, after the firm cut its 2014 earnings outlook, casting a shadow on its future payouts to shareholders.

"The share price has come off sharply on the back of weak quarterly results and forward earnings guidance which is very uninspiring," said Ketan Patel, of Ecclesiastical Investment Management, which is a shareholder in GSK.

"There will be concerns over the level of the payout ratio ... and low or no growth in the dividend."

The stock knocked 13.5 points off the FTSE 100, which closed up 2.81 points, flat in percentage terms, at 6,798.15 points. It had traded as high as 6,822.65 points before GSK's update was published at 1100 GMT.

Johnson Matthey fell 1.2 percent after the world's biggest producer of automotive catalytic converters posted an 11-percent fall in first-quarter underlying profit and said it expected a worse-than-expected impact from a stronger British sterling.

Bank of England officials this month discussed whether there was a case for an early rate rise, but were held back in part by strikingly low wage growth and signs of weakness abroad, the minutes showed.

For more visit: www.businessworld.ie