Provident Financial drops almost 60% after second profit warning
U.K. stocks were on track to snap a three-session losing streak Tuesday, bolstered by gains for miners and home builder Persimmon PLC after well-received financial updates.
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But Provident Financial PLC shares lost nearly 60% of their value after the doorstep lender issued its second profit warning in three months.
The FTSE 100 rose 0.7% to 7,366.50, with all sectors moving higher, led by the basic materials group.
Miners cheer: Mining heavyweights BHP Billiton PLC and Antofagasta PLC were among the top performers on the blue-chip benchmark.
BHP shares climbed 2.9% (BLT.LN) (BHP.AU) (BHP.AU) after the company said it's planning to sell its onshore U.S. oil and gas operations (http://www.marketwatch.com/story/bhp-billiton-looks-to-sell-us-shale-operations-2017-08-21). The decision followed a push by activist investor Elliott Management in favor of the move.
BHP also said its final dividend will rise threefold. The miner swung to a yearly net profit of $5.86 billion, but that was weaker than anticipated.
Antofagasta shares (ANTO.LN) were up 2.9%. The copper miner more than tripled its interim dividend payment (http://www.marketwatch.com/story/antofagasta-profit-surges-to-triple-dividend-2017-08-22) after reporting a sharp rise in half-year earnings.
Provident shift: But shares of Provident Financial (PFG.LN) tumbled 57% after the lender said it expects to lose between 80 million pounds and GBP120 million in the third quarter. The profit warning (http://www.marketwatch.com/story/provident-warns-on-profit-again-ceo-to-leave-2017-08-22), the second in three months, comes after Provident shifted to using full-time "customer experience managers" rather than self-employed agents in its home credit business.
"The previously announced dividend is being withdrawn and investors shouldn't expect anything until we see significant improvements. The 5.5% dividend yield was really the last leg holding the stock up, but this key support has now gone," said ETX Capital senior market analyst Neil Wilson in a note.
Provident also said Peter Crook has resigned as its chief executive.
Stock movers: Meanwhile, Persimmon (PSN.LN) gained 2.9%. The home builder said its first-half profit rose 30% (http://www.marketwatch.com/story/persimmon-profit-up-30-on-higher-house-prices-2017-08-22) to GBP457.4 million as it sold more houses at higher prices.
Shares of supermarkets were mixed after Kantar Worldpanel said Britain's four largest grocers logged growth in sales in the 12 weeks ending Aug. 13, a fifth consecutive increase. Tesco PLC (TSCO.LN) added 1.8% and Wm Morrison Supermarkets (MRW.LN) put on 0.7% but J Sainsbury PLC (SBRY.LN) shed 0.3%.
The pound bought $1.2855, up from $1.2900 late Monday in New York.
(END) Dow Jones Newswires
August 22, 2017 04:20 ET (08:20 GMT)