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GKN slumps down FTSE after dropping incoming boss

GKN slumps down FTSE after dropping incoming boss
 

GKN (GKN) has fallen to the bottom of the FTSE 100 after announcing a writedown and dropping its new chief executive before he had even taken up the role.

Shares in the engineering group fell 7.8% to 286.6p, as the FTSE 100 added eight points to 7,381.

GKN said Kevin Cummings, head of the group's aerospace arm since 2014 and announced as incoming chief executive in September, would be leaving the company, after his division suffered a writedown of up to £130 million.

'The GKN board has concluded that the next stage of GKN's development is best delivered under alternative leadership,' it said in a statement.

'As a result, Kevin Cummings, previously chief executive designate, will leave the board and GKN with immediate effect.'

Mike van Dulken, head of research at Accendo Markets, said the writedown would 'fuel real concern about more skeletons in its North American aerospace closet'.

'The rest of guidance may well remain unchanged but shareholder patience is threadbare with so much bad news overshadowing efforts to improve margins and cash flow.'

David Larkam, analyst at Numis, who rates the stock a 'buy', said despite the bad news, the group's actions could bring some positives. 

'The good news is that the door is now open for a new external chief executive to come in and carry out a thorough, impartial review to maximise the inherent value in the group,' he said.

'This will take time and may be painful but this also increases the possibility that the inherent value in the group can be released.'

GKN was joined at the bottom of the inex by Mediclinic International (MDCM), down 2.4% at 580.5p after the private hospital group reported an 11% fall in profits for the first half of the year.

The group, which also owns a stake in Spire Healthcare (SPI), has been looking to take over the group. But after its 298.6p per share offer last month was rejected it said 'no agreement has yet been reached on any of the key terms of an offer'.

Shares in Spire fell towards the bottom of the FTSE 250 on the news, down 6.3% at 276.6p.

Dignity (DTY) was another heavy faller on the FTSE 250, down 7.6% at £20.01 after Berenberg analyst Sam England downgraded the stock to 'hold' from 'buy'.

England flagged that alongside solid third quarter results, the funeral operator had flagged 'increased competition from new entrants and people searching for providers online, affecting pricing in funeral services'.

'Given that our investment case is predicated on Dignity's ability to deliver long-term growth in part thanks to strong pricing power, until its competitive response to these challenges is clarified, we are more cautious on it.'

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