Supermarket group Morrisons and security firm G4S have dropped out of the blue-chip FTSE 100 index as they paid the price for lacklustre performance.
The household name firms lost their places in the prestigious list of Britain’s top 100 companies after the FTSE’s quarterly review, published after the market closed on Wednesday. They were joined in the second-tier FTSE 250 by aerospace company Meggitt.
Replacements for the unfortunate trio include payment processing firm WorldPay, which enters the FTSE 100 a month after floating on the stock market.
The changes are part of a reshuffle that happens every three months, as the London Stock Exchange refashions its list of Britain’s top companies. The same process resulted in estate agent Foxtons dropping out of the FTSE 250.
Morrison’s much-anticipated departure from the top 100 comes after it flirted with relegation in June and September, amid a fierce price war in the retail arena that has eroded profit.
The Bradford-based retailer has struggled to fend off competition from discounters Aldi and Lidl, as well as price-cutting by larger rivals Asda, Sainsbury’s and Tesco. Its shares have fallen 17% since the beginning of the year and are likely to tumble further as relegation into the FTSE 250 will cause some investment funds that track the FTSE 100 to dump its stock.
Outsourcing and security group G4S also faces an exit from the FTSE 100 after a difficult six months in which its shares have fallen by 21%. Goldman Sachs advised clients to sell the stock earlier this year, citing slowing growth in emerging markets and the likelihood of increased spending as the industry modernises.
Meggitt’s demotion follows a profit warning in October that sent its shares tumbling by about 20%.
The three firms were replaced in the FTSE 100 by payment processor Worldpay, doorstep lender Provident Financial and Irish support services company DCC.
Worldpay’s elevation comes a month after it launched the largest float in the City of London this year. The payment processing group priced its initial public offering at 240p and has since seen its stock rise above £3.
Another newcomer to the FTSE 100 is Provident Financial, whose shares are up 46% in the year to date. The third entrant is business support services company DCC, up 68% since the beginning of the year.
DCC runs a variety of businesses that include operating unmanned petrol stations, distributing electronics to retailers such as Argos and John Lewis and the manufacturing of body butters for the Body Shop. It has grown after a series of takeovers, spending £1.8bn on acquisitions since 1994.
Further down the list of Britain’s biggest companies, Foxtons was the most high-profile of the firms to drop out of the FTSE 250.
The mining company KAZ Minerals was also relegated amid the continuing commodity slump, while the low oil price put paid to the position of Premier Oil and the oil services group Hunting. Petra Diamonds also left the FTSE 250 as an agreement by its banks to suspend the terms of its loans came too late to affect the quarterly review.
The FTSE promotions and demotions, based on companies’ stock prices at the close of play on Friday 27 November, will take effect from Thursday.
