GKN shares drop 9% after profit warning
“Operational challenges” expected to put pressure on its US aerospace business
by Abi Moses on 16th October, 2017
GKN dropped to the bottom of the FTSE 100 this morning after legal cases and cost pressures in its American business forced the auto maker to warn on profits.
This morning, shares in the group had dropped as much as 9% at the start of trading, down approximately 7.2% shortly before publication time at 323p. If held, that would mark the company’s worst one-day drop since June 2016.
The company has stated that it expects a pair of probable legal claims to cost it around £40m in the fourth quarter, whilst it predicts further write downs to come. They expect this as a result of pressure on its US aerospace business, stated its due to “operational challenges”.
Together, the challenges mean that GKN now predicts profits to be only “slightly above” last year. This compares to previous consensus forecasts of roughly 10 per cent growth.
Overall, this drop makes GKN the biggest faller on the FTSE 100, with the index tumbling 26.74 points to 7,529.50.
Meanwhile on the currency markets, the pound edged higher by 0.35% against the dollar at $1.3311 and 0.45% higher against the euro at €1.1258.
Yesterday, sterling had dropped after the EU’s chief negotiator, Michael Bernier stated that there was still “deadlock” over the Brexit divorce bill.
As a result of the fall in sterling, the FTSE 100 heightened to a record closing high. However, the pound then recovered, with analysts citing a German newspaper report that the UK may be offered a two-year transitional Brexit deal by the EU.
On the FTSE 250 index, shares of Millennium & Copthorne Hotels soared 21% after Singapore’s City Developments said it has offered to buy the remaining share of the UK hotel.
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