ITV and Royal Mail to drop out of FTSE 100 in reshuffle
Broadcaster ITV and postal delivery group Royal Mail are being ejected from the UK’s blue-chip share index in its latest reshuffle.
Both companies are dropping out of the FTSE 100 index after their values fell amid the cost-of-living crisis and the economic turmoil caused by the war in Ukraine.
ITV felt the axe as investors worried that advertising revenues would be hit by the slowdown in the UK economy, as inflationary pressures hit corporate profit margins and leave consumers with less disposable income.
ITV’s shares have dropped by a third so far this year, and tumbled in March when it announced plans for a new streaming service to take on Netflix, Amazon and Disney+ that will push up its costs.
“Competition is fierce in the sector, as the recent subscriber losses for Netflix have shown,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “There are concerns that consumers will be less willing to shell out for the upcoming ITVX venture, particularly given the cost-of-living crisis, and worries have risen about advertising revenue as a recession looms.”
ITV has predicted that advertising revenues will slide over the coming months, partly because of “macroeconomic and geopolitical uncertainty”.
Royal Mail has also been hit by rising costs, and a decline in demand for parcel deliveries as Covid-19 restrictions have been relaxed. Pre-tax profits at the postal operator fell 8.8% in the last financial year, and it warned last month that it would lift prices to counter climbing inflation.
Royal Mail’s shares have fallen about 40% this year. Richard Hunter, head of markets at Interactive Investor, said it couldn’t escape the drop this time after narrowly avoiding relegation in March. “Any progress
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