The Automobiles & Parts sector took a hit on Friday after Nomura said the share price momentum of engineering group GKN presented it with a ‘slight concern’.
Juho Lahdenpera at Nomura indicated that poor first half 2013 European auto demand would be likely to drive a cautious outlook for GKN.
‘The GKN share price is up 5.0% relative to the sector in the last month, which signals to us positive expectations by the market heading into the results,’ he said.
‘Although we are in-line with consensus for fiscal year 2012 and weakness in European auto demand has been well-flagged previously, the share price momentum is a slight concern to us, as car sales in Europe declined a further 9.0% year-on-year in January of this year, which we think will prompt a cautious outlook by GKN’s management. We take a cautious view on the shares heading into the numbers.’
In other sector news, it was revealed Thursday that UK car manufacturing rose by 1.2% in January, while commercial vehicle output tumbled 20.5%.
A total of 129,049 cars were produced during the month, compared to 127,500 a year ago, according to the Society of Motor Manufacturers and Traders (SMMT).
The car sector was supported by a strong domestic demand, which saw output rise 26.1% and exports increase by 79.1%.
Analysts suggest UK car manufacturing could grow a third bigger by 2016 with output approaching 2.0m vehicles each year, SMMT added.
‘Despite ongoing economic challenges, growing demand for UK-built products in emerging global markets coupled with major new investment is paving the way for a positive year for automotive manufacturing,’ said SMMT Interim Chief Executive, Mike Baunton.
However, commercial vehicle production fell to 7,822 from 9,844 as exports fell 3.2% and output for the domestic market grew 3.2%. Commercial vehicles include light panel vans, heavy trucks, minibuses, double-deckers and luxury coaches.
‘UK registrations of trucks were strong through most of 2012, but dropped off in the final quarter impacting output,’ Baunton said.
‘However, domestic demand for buses and coaches grew significantly through 2012 on the back of government incentives and a wider focus on public transport.’
Top performing sectors so far today
Construction & Materials 3,814.72 +2.52%
Electronic & Electrical Equipment 4,211.57 +1.96%
Software & Computer Services 1,058.88 +1.77%
Financial Services 6,532.83 +1.69%
Mobile Telecommunications 3,808.98 +1.55%
Bottom performing sectors so far today
Automobiles & Parts 5,889.59 -1.37%
Industrial Metals & Mining 2,762.74 -1.22%
Mining 19,423.21 -0.46%
Industrial Transportation 2,556.71 -0.30%
Aeronautics and Defence NULL 0.00%