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MARKET REPORT: Shares in car dealer Pendragon career off course

Shares in car dealer Pendragon careered off course after it warned that profits will be lower than previously expected.

The company said the introduction of EU emissions tests had significantly disrupted new car sales and created uncertainty over new vehicle supply.

Since September, all new cars sold in the EU have had to undergo the Worldwide Harmonised Light Vehicle Test Procedure, which aims to check pollution in more realistic conditions following the Volkswagen diesel scandal.

‘This will clearly have an effect on the group,’ Pendragon said in a trading update.

It said it now expects profits for the year to come in at £50m – down from £60m last year. Shares fell as much as 21 per cent before closing down 8 per cent, or 2p, at 24.35p.

Pendragon pointed to industry data, which showed a 20 per cent decline in sales of new cars in the UK in September, and said a similar trend had continued so far in October.

The sell-off at Pendragon came as the FTSE 100 finished the week slightly up 0.32 per cent, or 22.81 points, at 7049.8.

Oil majors Royal Dutch Shell and BP helped to bolster the blue-chip index as oil prices rose.

Brent crude rose 1 per cent to break the $80 a barrel mark.

The FTSE 250 fell yesterday, dropping 0.9 per cent, or 165.6 points, to close at 18,795.75 points.

Acacia Mining suffered after the gold miner raised concerns about the safety of its staff and said it would seek to speak directly to the Tanzanian government over a long-running tax dispute.

Interim chief executive Peter Geleta said Acacia may need to invoke a bilateral investment treaty between the UK and Tanzania to work through some 39 charges that include tax evasion, money laundering and corruption, some of which date back to before Acacia Group was established.

Its major shareholder Barrick Gold has been conducting negotiations with President Magufuli’s administration. Last year the government slapped the company with a £146bn unpaid tax bill and stopped it from exporting gold.

The interim chief executive also said he was deeply concerned about increasing risks to the safety and security of the company’s staff and the challenging operating environment in the country, which he said could impact the business.

‘I am particularly concerned with the criminal charges now being brought against several current or former employees over the past week,’ Geleta said.

The company said third-quarter revenue was down 3 per cent to £127m, which was the main driver in an 11 per cent fall in earnings before interest, tax, depreciation and amortisation to £34m. Shares closed down 6.5 per cent, or 10.35p, at 148p. Budget airline EasyJet was the biggest FTSE 100 faller after brokers at bank Main First downgraded its stock from ‘neutral’ to ‘underperform’. Main First almost halved its price target for EasyJet’s stock, from 1600p to 900p, as it said capacity growth on some of its routes would put pressure on prices this winter. Shares fell 6.3 per cent, or 72p, to 1068p.

Renishaw, an engineering and scientific tech company with expertise in areas from brain surgery to jet engines, saw shares fall after first-quarter pre-tax profit drop 9 per cent to £32.6m, though revenue rose 8 per cent to £154m.

The company said it was confident in its performance for the rest of the financial year, despite Brexit uncertainty and economic woes in Asia. Shares fell 10.2 per cent, or 428p, to 3764p.

Veterinary medicine maker Dechra Pharmaceuticals was a bright spot yesterday, with shares rising 8 per cent, or 172p, to 2332p after it acquired a Brazilian firm Venco for £38m.

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