Daily market update: Centrica, Nestle, Rio Tinto, Mondi, Debenhams

Investors got a nasty shock from Centrica’s results, causing the shares to slump and drag the UK market down in the process.

While Centrica is in the bottom half of the FTSE 100 by weighting, a large downward movement from its shares still had meaningful influence on the UK stock index.

The UK market was also dragged down by the market reaction to Rio Tinto’s results, albeit that looked more like profit taking after a strong rally than anything worrying in its figures. Weaker iron ore was offset by strong copper takings.

Unilever’s research and development boss Richard Slater offloaded £1 million worth of shares, taking advantage of the stock having last week hit its highest level since September 2019.

Centrica

If there was any suspicion Centrica’s recent run of success was more down to the market backdrop than any master strategy then doubts will only have been solidified by its recent results.

While the drop in earnings wasn’t quite as large as expected, Centrica provided disappointing news on share buybacks which has led the share price to power down in response.

Centrica, with its healthy exposure to the wholesale market alongside its ownership of the British Gas retail division, benefited from the surge in energy markets in recent years. The momentum has now been lost.

Centrica is hitting pause on buybacks so it can allocate spending to growth projects including the Sizewell C nuclear power. Executing on these ventures will be challenging and will put a dent in the company’s healthy cash position but could deliver more stable earnings if they ultimately prove successful.

Having been fuelled by a favourable environment since 2022, Centrica must now prove its mettle without a helping hand from rising prices.

Nestle

Nestle is to follow in Unilever’s footsteps and do the Strawberry Splits on its ice cream interests.

Nestle has a much smaller footprint in the ice cream world than Unilever had, with only a handful of brands including Maxibon and Extreme. It sells Haagen-Dazs under licence from Froneri and is now in talks to offload all its ice cream interests to that company.

Such a deal makes perfect sense. Big consumer brand companies like Nestle are going through a process of slimming to greatness. They’re looking at which parts of their business have the best potential for growth and anything that doesn’t cut the mustard is on the chopping block.

The rapid growth in weight-loss drugs also creates uncertainty for high-calorie products like ice cream and that trend might have encouraged Nestle to think about which business areas are now rated higher-risk from a GLP-1 perspective.

What makes the Froneri deal slightly confusing is that Nestle would essentially be selling the ice cream interests back to itself, albeit in diluted form.

Froneri is a 50:50 joint venture between Nestle and PAI Partners and is a roll-up vehicle for the ice cream sector. Should a deal be struck to sell the remaining ice cream interests to Froneri, it would be logical to consider Nestle’s next steps. Is it simply parking the rest of its ice cream operations in a joint venture so it can keep a foot in the door but not be directly responsible for the day-to-day operations? Or is it now time to exit its stake in Froneri and cut ties completely with ice cream?

Last October, PAI struck a deal whereby Abu Dhabi Investment Authority became a significant minority co-investor in Froneri. That might have been part of a bigger plan to change the ownership structure and potentially create an exit path for Nestle by bringing in a big investor who could mop up some or all of its holdings.

Rio Tinto

Comments from Rio Tinto CEO Simon Trott suggest merger talks with Glencore may have failed over price as he defended the company’s growth prospects as an independent entity.

However, this message seems to have fallen on deaf ears as Rio’s large iron ore operations served up a disappointing performance. Reduced steel demand in China – thanks to a prolonged property market slump – is hurting this part of the business.

A big driver behind the mooted tie-up with Glencore was the scramble for copper which is needed for the roll-out of AI data centres and infrastructure, and kit associated with renewable energy and electric vehicles.

Growth in Rio’s copper revenues is not purely down to the big increase in prices but also to a meaningful increase in volumes as it ramps up production from its Oyu Tolgoi mine in Mongolia.

Investors will hope there is some conservatism baked into copper output forecasts for 2026 given they imply some tailing off from the level achieved in 2025.

Rio may face pressure to return to the idea of a combination with Glencore after the mandatory six-month cooling off period has expired later this year.

Mondi

Mondi’s share price has more than halved over the last five years and its latest results saw the company slash its dividend as profits plunged. Falling paper prices have put pressure on margins.

During the pandemic, the surge in e-commerce helped drive big demand for packaging and boosted the wider packaging industry. However, this papered over the cracks of a long running move away from paper-based communication and rising costs. The struggles in the wider sector have only been exacerbated by recent economic and geopolitical uncertainty.

Investors seem to have taken modest encouragement from Mondi's efforts to get costs under control, but this feels more like damage control than anything more exciting.

Investors will take a lot of convincing on Mondi’s argument that e-commerce and a shift from plastics to recyclable paper-based alternatives for packaged goods can result in meaningful and profitable growth in the long term.

Debenhams / Boohoo

Boohoo’s parent company Debenhams has raised more money than originally targeted, citing strong investor demand. It raised the money at 18p per share, less than the 20p per share guidance in the original fundraising announcement.

Just over a quarter of the £40 million fundraise has come from company directors, the bulk of which from co-founder Mahmud Kamani.

A further quarter (27%) has come from rival retail group Frasers, which implies it could continue to put pressure on Debenhams to oust Kamani from the board. Frasers tried and failed to get rid of Kamani a year ago as part of broader efforts to overhaul the board amid concerns the business was being mis-managed.

Frasers has been relatively quiet regarding its investment in Debenhams since publishing an open letter in August 2025 raising concerns about Kamani’s alleged conduct. By participating in the latest fundraise, Frasers maintains its position as a major shareholder and may potentially use this position to continue banging the drum for change in the business.

Everyman

Tongues were wagging around the intentions of private equity group Blue Coast as it sits close to the point at which it would be compelled to make a takeover offer for cinemas group Everyman.

Blue Coast owns 29.2% of Everyman – hitting 30% would require a mandatory offer for the remaining shares.

Blue Coast’s representative on the Everyman board, Michael Rosehill, has just bought £29,036 worth of shares in a personal capacity. One could apply the same logic in that both Blue Coast and its representative see great value in the business in its current depressed state.

Everyman’s shares have fallen by 81% over the past five years as investors worry about the future of the cinema industry in an at-home streaming world.