Shares in GKN (LON:GKN) have fallen deep into the red in London in today’s session as the company announced that it had sacked its new chief executive, weeks before he was due to take the helm at the blue-chip company. The group further warned of a further writedown at its North American aerospace division.
As of 09:32 GMT, GKN’s share price had lost 7.75 percent to 286.74p, weighing on the blue-chip FTSE 100 index which currently stands flat at 7,372.96 points. The group’s shares have lost more than five percent of their value over the past year, and are down by some 13 percent in the year-to-date.
GKN ditches CEO designate
GKN announced in a statement this morning that its Kevin Cummings, previously CEO Designate, will leave the Board and the company with immediate effect, with the company having concluded that the next stage of its “development is best delivered under alternative leadership”.
The blue-chip group has therefore asked Anne Stevens, currently a non-executive director of the Board, to assume the role of Interim Chief Executive with effect from January 1, until a successor is appointed, taking over from outgoing boss Nigel Stein who will step down from the role on December 31.
Hit to profits
The FTSE 100 group, which had previously warned it had been “made aware of two probable claims” likely to reduce profits by £40 million, said today that a review initiated across Aerospace plants in North America was “likely to result in a further write-off estimated to be between £80 million and £130 million”.
“While today’s warning is clearly more one-off in nature than October’s, it is a major knock to management credibility,” RBC analyst Wasi Rizvi commented, as quoted by the Guardian. “The turmoil may be seen by some as perhaps making a break-up more likely and we expect that investors will continue to see value creation potential in such a scenario. The appointment of an independent interim chief executive may also prompt some fresh thinking.”