Sector movers: Poor results, broker talk send telecoms and general retailers lower

Poor results sent shares in BT and Mondi straight to the bottom of the pile, weighing on fixed line telecoms and Forestry&Paper.

BT said that following January's profit warning over the £530m Italian accounting scandal and a slowdown in its public sector and international business, revenue for the year to 31 March rose 27% to £24.06bn but profit before tax tumbled 19% to £2.35bn.

Shares in Mondi were also torched on Thursday.

The company informed shareholders that strong sales volume growth in its first quarter was more than offset by a significantly lower forestry fair value gain, inflationary cost pressures and lower average selling prices.

Downbeat comments from analysts accounted for weakness in TalkTalk, Centrica and Pets at Home.

JPMorgan Cazenove took the hot air out of Centrica, downgrading the owner of British Gas to 'underweight' from 'overweight', while highlighting the "unsettling reality" of UK supply market changes.

The bank said that despite the strength of Centrica's UK supply operations, it is worried about significant downside from the price regulation of Centrica's Standard Variable Tariff customer base and evidence of a price war emerging, with incumbent generation owner Engie entering the residential supply market.

In parallel, brokers Macquarie and RBC told investors to hang up on TalkTalk.

The former downgraded the shares to 'neutral'

Analysts at the Australian broker told clients: "TalkTalk's reworking of its business model is rational but key to the future is execution. The company has bought itself time but needs to deliver on customer and revenue growth. The positive from the FY16/17 announcement is the return to on-net addition growth and the expectation this could continue going forward."

Regarding General Retailers, Morgan Stanley inked a note saying; "We believe that Dunelm, Halfords and Pets at Home all rely on gross margins that are unsustainable in the age of online retailing and discounters. All three have been underperforming for some time, but we see considerable further downside. We see Pets at Home forecasts as the most at risk near term."

Miners took up the slack, helping to keep the Footsie in the black, with the precious metals segment bouncing back alongside the price of gold.

Top performing sectors so far today
Mining 14,513.04 +0.96%
Oil Equipment, Services & Distribution 15,822.72 +0.78%
Beverages 18,428.06 +0.73%
Health Care Equipment & Services 8,122.40 +0.61%
Banks 4,321.60 +0.44%

Bottom performing sectors so far today
Fixed Line Telecommunications 3,431.67 -4.34%
Forestry & Paper 21,542.72 -1.67%
Gas, Water & Multiutilities 6,264.94 -1.48%
General Retailers 2,626.55 -1.38%
Food & Drug Retailers 2,963.03 -1.33%