Investors nettled by latest warning and management confusion at GKN

• 12^th CEO change in the FTSE 100 during 2017

• Highest since 2014 but in line with long term average

Russ Mould, investment director at AJ Bell, comments:

“GKN began life with the name Guest, Keen and Nettlefold and investors in the stock have been stung today by an unwelcome further profit warning in relation to its US aerospace arm and the announcement that new CEO Designate Kevin Cummings is to leave the company with immediate effect. GKN has declined to explain the reasons for the sudden shift in its succession plan, even though current boss Nigel Stein will retire on 31 December as planned.

“It may – or may not – be a coincidence that the company has announced an additional write-down of some £80 million to £130 million relating to its aerospace facilities in Alabama and a review of working capital needs across its other US aerospace sites. This comes on top of the £15 million inventory costs at GKN Aerospace North America announced back in October. Mr Cummings joined GKN as the boss of Aerostructures in North America in 2008 and then took the helm of the whole Aerospace business in 2014.

“It is unusual for one FTSE 100 company to be in such a state of managerial flux, but we currently have two, if you include the London Stock Exchange which is readying itself to find a successor to Xavier Rolet.

“Mr Cummings won’t be getting anywhere near the current average tenure for a FTSE 100 CEO, which is 66 months, although the level of change at the top in the UK’s premier index looks set to be no greater than average in 2017, even allowing for the untimely death of Coca Cola HBC’s Dimitris Lois.

Source: Company accounts. *2017 and 2018 based on those already announced.

“Nine members of the FTSE 100 have already seen a change at the top this year, with a tenth (easyJet) about to do so. An eleventh (Paddy Power Betfair) has already unveiled its succession plan, while a further change for the year came at a firm which has since dropped out of the index, Provident Financial, with the departure of Peter Crook after the summer’s profit warnings.

“That takes us to 12 changes for the year, bang on the post-2000 average, with another seven already planned for 2018.”

Announced changes in FTSE 100 members’ CEOs

Source: Company accounts. *Becomes effective 1 December 2017. **Date to be confirmed. *** No longer a member of the FTSE 100.