MARKET REPORT: Melrose shares rally on aerospace shake-up plan

Turnaround specialist Melrose led the blue-chip index yesterday after pledging to focus solely on its aviation business.

The FTSE 100 group is targeting a restructuring over the next 12 months, focusing on the company it acquired when it bought GKN, which dates back to 1759 and made cannonballs fired at the Battle of Waterloo and Spitfires during World War II , for £8.1 billion in a hugely controversial hostile takeover in 2018.

“The board will not again attempt to acquire an unrelated industrial company or, in the short term, a material aviation company,” Melrose said.

It comes after Melrose spun off its GKN auto division into a standalone company listed on the London stock market last month.

Shares in the company, which has been renamed Dowlais and makes parts for electric, petrol and diesel cars, opened at 146 pence.

This left Melrose with the aerospace business of GKN, which makes parts for defense and civilian aircraft.

In its first update since the split, it said sales in the first four months of the year were 19 percent higher than the same period in 2022.

Melrose hopes to generate revenues of between £3.35bn and £3.45bn by 2023 and profits of around £340m to £360m. Shares rose 4.8 percent, or 20.3 pence, to 444.7 pence.

The FTSE 100 fell 0.3 percent, or 22.76 points, to 7741.33 while the FTSE 250 fell 0.02 percent, or 3.75 points, to 19,273.29.

London-listed gold and silver producer Polymetal is seeking shareholder approval to move its headquarters from Jersey to Kazakhstan to mitigate the effects of sanctions imposed on Russia.

It says its ability to run the business remained at risk while Jersey was under restrictions.

The shares, which plummeted 24.6 percent or 69 pence to 211 pence, will be delisted from the London stock exchange when the company’s headquarters move to Kazakhstan.

Stockwatch – Unbound

Unbound, the owner of Hotter Shoes, lost half of its value after the failure of a major fundraising deal.

The group, formerly known as Electra Private Equity, said Marwyn Investment Management had agreed to buy £10m of new shares but pulled out, expressing “concerns about current trading”.

Revenue in the first quarter was lower than expected and the company has brought in turnaround specialist Interpath Advisory.

Shares fell 50 percent, or 3.62p, to 3.63p.

Capita warned that the cyberattack it suffered in March could cost up to £20 million. The outsourcer, which collects the BBC license fee, said hackers accessed data from less than 0.1 percent of its servers, forcing it to hire specialists to fix the damage and bolster IT security.

Turnover in the first four months of the year was 4.8 percent higher than in the same period a year ago. Shares fell 3.9 percent, or 1.34 pence, to 32.98 pence.

The world’s largest catering company, Compass Group, gained 1.3 percent, or 26 pence, to 2,091 pence after posting higher profits and revenues.

It touted strong performance in its business and industrial sector as workers returned to work, while its sports and leisure arm monetized larger crowds at live events.

Turnover rose by a quarter to £15.8 billion in the six months to the end of March, while profits jumped 41 per cent to £1.05 billion.

The group now expects annual profit to grow nearly 30 percent and sales to grow 18 percent compared to its previous forecast of 15 percent.

There was good news for the UK’s largest pawnshops after making money off people looking for short-term loans. There was also strong demand for used jewelery and watches in the first four months of the year.

H&T said January and March were record months for lending. The jewelery and watch business raked in more than £1 million in online sales in January for the first time in a single month. But shares fell 2.4 percent, or 11 pence, to 446 pence.

Just Group rose 5.5 percent, or 4.7 pence, to 89.9 pence after JP Morgan raised the specialist insurer’s price target from 115 pence to 125 pence.

And Comptoir, which owns 26 Lebanese restaurants, hailed 2022 as a “critical year” after sales rose 49.7 per cent to £31 million. Shares rose 12 percent, or 0.7 pence, to 7 pence.