Market Report: United Technologies' profit warning adds to gloomy outlook for aerospace industry

A profit warning from a giant US aircraft engine maker put the skids on London-listed shares in aerospace companies.

United Technologies, which until recently was worth more than $100bn (£64bn), nosedived after it warned that it would fall well short of its targets and that annual operating profits for the struggling aircraft engine division would be $25m lower than in 2014 at $75m.

Two weeks ago the UK’s biggest aircraft engine maker, Rolls-Royce, issued its fourth profit warning in less than 18 months following issues at its civil aerospace arm which makes engines for passenger jets.

The gloomy outlook for the industry dragged Rolls down 17.5p to 765.5p. BAE Systems fell 8.2p to 473.4p, Cobham 4p to 262.6p and aerospace engineer Meggitt 10.8p to 476p.

Aircraft engine parts maker GKN rose 0.6p to 309.1p but was trading at 312p earlier in the day.

The FTSE 100 fell 19.62 points to 6,769.07p as investors held fire, waiting for the US second-quarter earnings season to get into full flow, as well as for more developments in Greece.

EasyJet, down 55p to 1,666p, was the biggest faller after Commerzbank cut its target price on the airline to 1,550p.

Shares in the car insurers were all higher as the AA’s quarterly index showed that insurance premiums in the UK rose more than 5 per cent in the second quarter.

That boosted shares in Admiral, up 65p at 1,518p, Esure, up 5.1p at 269.3p, and Direct Line, up 2.4p at 359.1p.

Weakness in the euro has taken its toll on SSP Group, down 2.4p to 304.3p. The FTSE 250 train station food group, run by the former WH Smith turnaround whiz Kate Swann, admitted the pound’s strong performance against the euro and the Norwegian and Swedish currencies had hit third-quarter revenues.

In the small-cap universe, mobile business software group Globo rose 1.5p to 48.75p, shrugging off concerns about Greece, where it expects to generate 6-7 per cent of its revenues in 2015. The company, which has about €100,000 of cash in Greek bank accounts, said it would be cheaper to pay its 198 staff there if Greece dropped out of the euro.