Falling fortunes

The construction industry was licking its wounds on Friday after one of the worst weeks for shares in the sector this year. The construction and building materials sector fell 4% to 3222, reflecting the general weakening of confidence in the face of poor economic news.

Construction shares across the board failed to stave off the ripple effect from the news of slowing economic activity and an ensuing dip in business and consumer activity.

The share prices of 49 of the 56 companies in the construction sector were down at the close of trading on Friday. Some of the worst hit were housebuilders, including Redrow (-7.1%), Crest Nicholson (-6.9%), Persimmon (-5.3%) and Wimpey (5.6%).

The housebuilders’ performance was not helped by a somewhat downbeat statement from Wilson Bowden at its annual general meeting last week. The company, which some analysts described as “characteristically candid”, said sales would drop in the first half of the year and margins were also under greater pressure.

One of the few housebuilders to escape last week almost unscathed was Westbury. Shares in the housebuilder dropped less than 1% because it had reported solid annual results, with a 13% rise in pre-tax profit to £120m. The City also approved of the company’s succession plans, as a result of which Nigel Fee will take over from Martin Donohue as chief executive in November.

Contractors also fell victim to the widespread gloom. One of the few to escape was Japanese firm Kajima. Despite the fact that its UK arm is set to report £80m of losses later this month because of its involvement in several PFI schools projects, the firm’s shares rose 2.5%, largely a result of the protection it receives from its giant Japanese parent.

The poor performance of Wolseley’s shares last week had a significant impact on construction shares overall because it is the biggest company, with a market capitalisation of more than £6bn. Its shares fell 5.2% to 1048p.

In the support services sector, shares in Atkins dropped almost 5% to 604.5p, and Mouchel Parkman‘s shares plummeted 7% to 228.5p.

The All-Share Index outperformed the construction sector, falling 1.5% to 2397.

Angela Monaghan is business editor