FTSE 100 movers: Melrose Industries rallies; Next hit by downgrade

London’s FTSE 100 was up 0.2% at 5,951.38 in afternoon trade on Thursday.

Melrose Industries was sitting pretty at the top of the index after saying it planned big job cuts at its GKN Aerospace business as the industrial turnaround company reported a first-half loss of £560m.

The company's pre-tax loss for the six months to the end of June widened from £131m a year earlier as revenue dropped to £4.1bn from £5.6bn. Melrose said GKN's sales were expected to fall by up to 30% in 2020 and that it would make a "significant reduction" to the division's global workforce in the second half.

Analysts said the results were better than feared and pointed to the fact Melrose highlighted encouraging signs of recovery over the summer at its automotive and powder metallurgy businesses.

Engine maker Rolls-Royce gained after winning a contract worth many millions of euros to provide the neutron flux monitoring system for two nuclear reactors under construction in China.

On the downside, British Land was weaker after a downgrade to ‘equalweight’ at Morgan Stanley, while BHP, Admiral and Antofagasta were lower as their stock went ex-dividend.

Online supermarket Ocado was on the back foot following a few teething issues this week after its new joint venture with Marks & Spencer - replacing Waitrose - went live.

Next was in the red after Morgan Stanley downgraded the stock to ‘underweight’, noting that it’s currently trading higher than it was a year despite being hit hard by the Covid-19 pandemic.

MS pointed out that even in its own upside scenario, Next revenues are likely to fall 18% this year and its profits more than halve. Although its debt will be down, its leverage will be up and it may need the covenant waiver it has agreed with its banks, Morgan Stanley said.

Despite these issues, the shares are now trading higher than they were last year, when there was pandemic, the economic outlook was broadly stable and Next was on course to make £725m of profits and to return £500m of this to its shareholders.

FTSE 100 - Risers

Melrose Industries (MRO) 115.20p 14.63%
International Consolidated Airlines Group SA (CDI) (IAG) 221.80p 9.31%
ITV (ITV) 64.52p 9.21%
Compass Group (CPG) 1,308.50p 6.64%
Rolls-Royce Holdings (RR.) 228.80p 5.15%
Whitbread (WTB) 2,593.00p 4.98%
JD Sports Fashion (JD.) 746.40p 4.95%
GVC Holdings (GVC) 834.00p 4.75%
Barclays (BARC) 107.66p 4.02%
British Land Company (BLND) 364.60p 3.99%

FTSE 100 - Fallers

BHP Group (BHP) 1,674.40p -3.78%
Admiral Group (ADM) 2,581.00p -3.73%
Ocado Group (OCDO) 2,450.00p -2.93%
Reckitt Benckiser Group (RB.) 7,340.00p -2.63%
DCC (DCC) 6,460.00p -1.97%
Polymetal International (POLY) 1,926.00p -1.88%
Next (NXT) 5,920.00p -1.82%
Pearson (PSON) 530.00p -1.67%
Glencore (GLEN) 171.52p -1.64%
Antofagasta (ANTO) 1,082.00p -1.46%