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This analysis examines the Q2 2022 reshuffle of the Financial Times Stock Exchange (FTSE) 350 companies, as published by the global index provider, FTSE Russell, in its latest quarterly review.

FTSE Russell announced its second of 2022 on 1 June 2022, which saw two changes to the FTSE 100 and seven changes to the FTSE 250. The changes are to take effect from the start of trading on 20 June 2022.

Changes to the FTSE 100 index

Media company ITV plc (ITV) and postal service group Royal Mail plc (Royal Mail) are the first blue chips to be dismissed from the FTSE 100 as we slowly move into the post-coronavirus (COVID-19) corporate landscape. Both companies have recently suffered downturns in their share prices amid the cost of living crisis and the economic fallout of the Ukraine conflict after a relatively buoyant couple of years.

At the start of 2022, ITV had almost recovered from its early 2020 in share price (from 136.00 pence per share on 8 February 2020 to 54.42 pence per share on 28 March 2020), with the company seemingly weathering the in advertising revenues and the uncertainties associated with the coronavirus pandemic.

However, it seems a full recovery was not to be, with ITV’s share price once again collapsing (from 110.65 pence per share on 2 March 2022 to 71.28 pence per share as of 6 June 2022) in the aftermath of the company’s in its final results that it intends to compete with Netflix, Amazon and Disney+ through the launching of its own streaming service, ITVX, in the fourth quarter of 2022. According to ITV, it hopes that ITVX, as ‘the first integrated AVOD/SVOD streaming platform in the UK’, will ‘enable ITV to double streaming viewing, double monthly active users, double subscribers and deliver valuable addressable advertising inventory at scale’. Unfortunately, it seems that the company’s investors were not convinced by the proposed investment in the new service, as competition in the streaming sector has become extremely fierce during the ongoing cost of living crisis.

The decline in Royal Mail’s share price has been more gradual than that of ITV, at a steady pace from 526.20 pence per share on 13 January 2022 to 306.80 pence per share as of 6 June 2022. According to the postal service group’s for 2021–22, the company is no longer benefitting from the tailwinds of the coronavirus pandemic, which saw a significant uptick in postal volumes as a result of the temporary safety restrictions introduced to combat the virus. Indeed, Royal Mail noted that its ‘revenue was down 1.6% year-on-year, reflecting changing consumer behaviour following removal of lockdown restrictions and lower international volumes’. Moreover, the company believes that its fortunes are unlikely to get much better in the near future:

‘Inflation rose throughout the second half of the year. Wage inflation in tight labour markets, sharp increases in energy and fuel costs, exacerbated by the war in Ukraine, and a cost of living squeeze in many countries are resulting in an uncertain outlook for GDP and consumer spending, creating significant headwinds as we enter 2022–23.

Given this environment it is more important than ever that we accelerate the transformation of Royal Mail to improve efficiency and continue to harness GLS' growth opportunities in a profitable way.’

Replacing ITV and Royal Mail in the FTSE 100 are multinational energy and services company and owner of British Gas, Centrica plc (Centrica), and the UK’s largest provider of student accommodation, Unite Group plc (Unite Group). The former has a steady climb in its share price since its collapse at the start of the coronavirus pandemic, with Centrica ‘strong operational performance in the first four months of 2022’ and expecting ‘full year adjusted earnings per share to be around the top of the range of more recent analyst expectations’ despite recent supply chain disruption and higher inflation. Indeed, the company seems to have cashed in on spiralling energy prices brought about by the ongoing Ukraine conflict, with its adjusted operating profit for FY 2021 (£948m) more than double that of FY 2020 (£447m).

Similarly, Unite Group has its fortunes improve as the coronavirus pandemic waned and universities have seen a return of students, with 77% of the company’s rooms being sold for the 2022–23 academic year as of 8 April 2022. In addition, Unite Group expects strong student demand for 2022–23 ‘from both domestic and international students, with UCAS applications up 7% compared to pre-pandemic levels and reduced disruption from travel restrictions and grade inflation’.

Changes to the FTSE 250 index

The Q2 reshuffle is to see the investment holding company of online fashion retailer ASOS.com Ltd, ASOS plc, enter the FTSE 250 for the first time, as it from AIM 50 to the London Stock Exchange Main Market in late February 2022. This is despite a 70.8% in the company’s share price over the past year, from 5,192.00 pence per share on 26 June 2021 to 1,516.00 pence per share on 7 June 2022, as the company to suffer from supply chain constraints and cost inflation.

Also to be promoted to the FTSE 250 is the Bank of Georgia Group plc, which returns to the index after being booted out back in September 2020 (see: FTSE 350 quarterly reshuffle: B&M's bargains land it in FTSE 100). and (Target Healthcare REIT) are also to join the FTSE 250, with both real estate investment trusts seeing a gradual increase in share price over the past couple of years (although in the case of Target Healthcare REIT, this rise has been somewhat volatile).

Of those to be demoted from the FTSE 250, all have seen a steady decline in their share prices over the past year, including , , , and .

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