Drop in Micro Focus International shares weighs down FTSE 100
Micro Focus International fell nearly 17% on the back of disappointing half-year results.
The FTSE 100 fell into the red on Monday, ending a string of record highs as Micro Focus International shares dragged on the index.
London’s blue chip index ended the day down 0.36% or 27.71 points at 7,696.51 points, edging down from the record close it set on Friday at 7,724.22 points.
It was knocked by a near 17% drop in Micro Focus International, which was the worst performer on the FTSE 100, as the software group released disappointing half-year results.
Down 437p at 2,145p, it was the lowest level for Micro Focus shares since mid-August.
Investors were reacting to a 2.9% drop in half-year sales to $664.7 million (£491.3 million) – when excluding its tie-up with Hewlett Packard Enterprise (HPE) Software – and news that revenues are expected to fall between 2% to 4% for the year to October 2018.
David Madden, a market analyst at CMC Markets UK, said: “The drop in revenue spooked traders and so did the management shake-up.
“Mike Phillips, the current chief financial officer, will become head of mergers and acquisitions and Mr Phillips will be replaced by Chris Kennedy of easyJet.”
The FTSE 100 was clearly lagging behind its peers, with the French Cac 40 and German Dax ending the day up 0.3% and 0.36% respectively.
In currency markets the pound was mixed, trading 0.4% higher against the euro at 1.132 but down 0.07% versus the US dollar at 1.356.
Investors were digesting data from Halifax showing that UK house prices fell 0.6% month on month in December in the first monthly decline in half a year, as falling wages and Brexit fears weighed on the market.
Brent crude was down 0.2% at 67.61 US dollars per barrel as investors continued to cash in on the jump in prices that sent the commodity past $68 per barrel last week.
In UK stocks, Shire shares were among the worst performers on London’s blue chip index after a strategic review resulted in the pharmaceuticals giant announcing that it would create two separate business divisions to cover rare diseases and neuroscience respectively.
The company said it would consider the merits of independently listing each of the two divisions as part of the second stage of its review.
Shire shares ended the day down 210.5p at 3,664.5p.
G4S was at the top of the FTSE 100 – up 11.1p at 286.3p – after UBS raised its price target for the security firm’s shares to 310p from 300p and upgraded it to “buy” from “neutral”.
Shares in Mothercare plunged more than 27% or 17.05p to 44.95p as the baby retailer warned over profits after an unscheduled trading update revealed that UK like-for-like sales plummeted 7.2% in the 12 weeks to December 30, while online sales tumbled 6.9%.
As a result, Mothercare now expects adjusted group profit for the year is likely to be in the range of £1 million to £5 million – down from previous estimates of around £10 million.
The biggest risers on the FTSE 100 Index were G4S up 11.1p to 286.3p, Tesco up 4.6p to 214.3p, Mediclinic International up 12.4p to 638.4p, Rio Tinto up 78p to 4,037.5p.
The biggest fallers were Micro Focus International down 437p to 2,145p, Shire down 210.5p to 3,664.5p, 3I Group down 23.6p to 920.2p, and Barratt Developments down 10.4p to 647.4p