Horse Meat Scandal Fails to Scare Investors
Chesters, Laura, The Independent (London, England)
The frequency of new horse meat jokes may have reduced, but the rate that new companies mixed up in the equine outrage emerge is showing no signs of slowing. Yesterday a Marks & Spencer sandwich and soup supplier got itself in a sticky mess over a sauce it supplied to Asda.
Greencore earlier this week said it had "no reason to believe it had been affected in any way" by the horse meat scandal sweeping Europe's food industry. But yesterday, after its share price continued to fall during the week, it announced its Asda beef bolognese sauce has been withdrawn "following the detection of traces of equine DNA".
Greencore is just the latest food producer to be caught up in the fiasco, and its shares lost as much as 20 per cent, but recovered some of this loss and ended down 9.75p to 92.5p on the news.
The yearly revenue from all Greencore's products currently withdrawn totals less than 1m, but there could be further cases. If horse meat traces were found in Greencore products supplied to M&S it could be of even greater concern to investors. But Darren Shirley at Shore Capital, which rates Greencore as hold with 88p share price target, said: "We do believe that in due course Greencore and the broader food chain will emerge with a more robust procurement system, and so the underlying investment case for Greencore should not be derailed."
Traces of horse meat found in food from the catering group Compass and the hotels to coffee group Whitbread did not rattle investors yesterday. Whitbread shares were up 20p to 2,671p, while Compass added 4p to 784p. Trevor Green, fund manager at the Compass shareholder Aviva, said: "The key is to respond quickly and openly, which Compass has done. Now they have updated the market on the situation we think this is a non-issue for the group."
The pub group Greene King - owner of the Hungry Horse pub and food chain - said it was "happy to report that no problems have so far been found". The news deprived comedians of a new gag, but the shares lifted 4.5p to 710p.
Moving away from horsegate, shareholders in London Stock Exchange were unhappy with an update from the clearing house LCH.Clearnet. LSE is set to buy LCH, but its underlying earnings were disappointing, and analysts at RBC Capital warned there are signs that the "integration and turnaround could be lengthy and complicated".
LSE had earlier this week been trading at close to a five-year high, but yesterday the shares tumbled 53p to 1,288p.
Over on the benchmark index, the broadcast group ITV was up 3.6p to 117p after the advertising giant WPP got a boost from analysts at Morgan Stanley. Morgan Stanley upped …
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Publication information: Article title: Horse Meat Scandal Fails to Scare Investors. Contributors: Chesters, Laura - Author. Newspaper title: The Independent (London, England). Publication date: February 16, 2013. Page number: 50. © 2009 The Independent - London. Provided by ProQuest LLC. All Rights Reserved.