Shares in Essar Energy (ESSR) fell by nearly 15% on Monday, putting a large weight on the overall UK market. The UK-traded, Indian-focused energy company reported a steep drop in full-year profit for 2011, which missed analysts' expectations. “Today’s figures contained no obvious reason for renewed optimism, core earnings fell by 10% on weaker refining margins and a Rupee depreciation ... With a market cap of only £1.5 billion the stock is likely to be ejected from the FTSE 100 in March at the quarterly review,” said analysts at SilverWind Securities in their daily UK market report. Shares in the company have lost 70% of their value since listing on the London Stock Exchange in May 2010.
Two other companies that experienced significant losses after reporting full-year results were HSBC Holdings (HSBA) and Pearson (PSON). HSBC shares fell by 3.7% and shares in Pearson, the publishing giant that owns the Financial Times, dropped by 3.8%. Morningstar analyst Michael Corty said in his latest research report that Pearson's Monday results were solid, however, the company is slightly overvalued at present levels.
These three companies - Essar, HSBC and Pearson - contributed to a 20-point drop, or 0.3% loss, on the FTSE 100 index. The index closed the trading day at 5,916. The FTSE 250 index was also off by 55 points, or 0.5%, closing at 11,472.
At the end of trading on Monday, 36 of the 100 companies listed on the FTSE 100 had eked out some gains, including Marks & Spencer Group (MKS) and Admiral Group (ADM). However, 61 registered losses.