Engineering-mini-conglomerate Smiths Group was almost £500 m wiped off its market value after warning about problems in its medical Department.
In operating results, the MHP of the FTSE 100, while it returned to growth at the group level, the medical business has problems.
Some of its medical devices were suspended from use due to new EU regulations, which is compounded by the termination of two contracts with us.
Investors took flight on the news, shares plunging as much as 9.4 PC in early trade. They closed 7pcs price 16.27, business valuation at £6.4 billion.
Kuznetsov said 11 months, until the end of June, sales were up 3pc on a basic basis, and that with the exception of medical units, the business will operate in line with expectations.
The hub markets – Smiths groups PLC
The company has five main businesses: John crane, supply of components for the energy industry; detection, which makes airport security scanners port; Interconnect, which makes electronic components; cable Flex-Tek, which makes hoses used in industry and resources and medical.
Medical is the largest part of the Smiths, with sales of £951m last year, almost a third of total group revenues. The company said that the device will report a 2pc drop in full-year sales.
Troubled medical business is subject to potential sale to rival icu medical. When the news broke about a possible combination in may, she helped lift shares of Smith to a maximum excess of £18.
Smiths Group also makes security scanners
Artem Hatsaturjants, analyst Accendo markets, called the new “effective profits warning, despite a generally positive update”.
“The market reaction highlights the vagaries of the stock market and how even one ineffective units can sour the Outlook of the investor for otherwise healthy businesses,” he added.
“While the Kuznetsov Group is trying to reassure investors, pointing out that this is a one-time violation of the rules something entirely out of the hands of the company.
“Post-landscape the British exit from the EU is still unclear, for businesses the UK company’s confidence that it can avoid similar failures in the future should be taken with a pinch of salt”.