Melrose steadies ship after lockdown setback
TURNAROUND specialist Melrose Industries was a steady riser on the FTSE 100 leaderboard as investors cheered a bullish update.
Aggressive cost- cutting and a rebound in demand for car parts has helped steady the ship after a tumultuous start to the year.
Melrose, which bought prestigious engineer GKN in 2018, was hit harder by Covid than many manufacturing firms.
Its businesses making components for planes and vehicles were disrupted as lockdowns took cars off the road and grounded flights.
The aerospace arm was still suffering, with sales in the four months to October down 37pc compared with the same period of last year.
But swift cuts mean the division will break even this year.
Sales in the automotive arm were down 3pc and powder metallurgy, which makes highly specialised industrial components from metal powders, 7pc lower.
But both returned to profitability and another division’s sales rose by 13pc.
Overall, Melrose’s full-year figures are likely to be at the top end of expectations. Shares rose 1.5pc, or 2.5p, to 165.65p, putting it 13th on the leaderboard yesterday.
A number of other hard-hit companies that have recently enjoyed a rally were on the back foot.
Contractor Capita slumped 8.4pc, or 4.26p, to 46.3p, while travel firm Tui fell 6.6pc, or 35.8p, to 510.8p, Aston Martin dropped 1.2pc, or 0.95p, to 76.55p and Cineworld was changing hands at 55p after falling 6.98pc.
Their falls helped drag the FTSE 250 1.1pc, or 220.17 points, down to 19,569.39. The FTSE 100 was also in the red, closing 0.6pc lower, down 41.08 points, at 6391.09, as big banks and financial firms slipped on economic uncertainty.
Barclays tumbled 4.4pc, or 6.58p, to 143.4p, while Lloyds was 3.5pc lower, down 1.37p, to 38.13p, and Legal & General fell 3.7pc, or 10p, to 261.9p.
Livestock breeder Genus was a hit with traders after several more months of helping China to rebuild its decimated pig population, which was subjected to mass culls after an outbreak of African swine fever, helped boost profits.
Trading has been ahead of expectations – though in an update for the four months to October it also said it was still trying to stay cautious. It rose 6.5pc, or 254p, to 4174p.
And water group United Utilities gave some respite to dividend-starved investors by upping its half-year dividend to 14.4p a share, up from 14.2p the same time last year.
But it also warned that a 5.2pc cut in bills imposed by regulator Ofwat would hit its full-year turnover. Shares lifted 2.5pc, or 22p, to 918.2p, despite the damp outlook. Sofa-seller SCS has bagged Holland & Barrett managing director Steve Carson to take over from outgoing boss David Knight.
Shares inched up 0.1pc, or 0.25p, to 198.75p after it revealed the latest lockdowns have delivered it a hammer blow.
SCS said that ‘given the tactile nature’ of its products – that is, people wanting to try out a sofa and sit on it before buying one – sales had nosedived by two thirds since the start of November when compared with the same few weeks last year.
Over on AIM, gift wrapping and Christmas cracker maker IG Design slid 2.7pc, or 16p, to 568p after some hefty director share sales. Its managing director, Lance Burn, exercised the rights over 188,500 options and promptly sold them for 580p each, netting a total of £1.1m.
And company chairman John Charlton sold 200,000 from his pension fund for the same price, pocketing £1.2m.