Rolls-Royce share price skyrockets as group posts ‘encouraging results’

Engine maker returns to profit as restructuring continues

Rolls-Royce share price skyrockets as group posts ‘encouraging results’

Shares in Rolls-Royce Holdings (LON:RR) have soared more than 11 percent in London this morning, as the blue-chip group revealed that it had returned to profit last year. The British engine maker further updated investors on its restructuring plans as the group’s chief executive Warren East continues with his efforts to simplify the business following a string of profit warnings.

As of 08:36 GMT, Rolls-Royce’s share price had added 11.51 percent to 920.60p. The shares are lending some support to the benchmark FTSE 100 index which has slipped marginally into the red amid trade war worries and currently stands 0.16 percent lower at 7,134.98 points.

Rolls-Royce posts results

Rolls-Royce disclosed in a statement this morning that it had made reported profit before tax of £4.9 billion last year, as compared with £4.6-billion loss in 2016. The group’s underlying revenue meanwhile surged six percent to £15.1 billion, while its underlying profit before tax came in 25 percent higher at 40.5p.

Rolls-Royce further revealed that its cash flow had improved to £273 million last year, up from £100 million in the prior-year period, driven by improved profits and good working capital management.

“We are encouraged by the improving financial performance in 2017 with growing revenues contributing to improved profitability and cash generation,” the engine maker’s chief executive Warren East commented in the statement.

Restructuring continues

Rolls-Royce’s CEO further noted that the group was now “embarking on a more fundamental restructuring programme with a refreshed leadership team and an improved market environment”. Earlier this year, the company unveiled plans to trim its business units from five to three.

The company noted that it was also “proposing to move to a considerably simplified staff structure,” with the programme expected to drive reduction in costs.

Rolls-Royce further updated investors on its troubles with its Trent 1000 engines, noting that the cost for fixing the issues with the engine and the Trent 900 would broadly double from the total cash cost in 2017 of £170 million and reach a peak this year.  It is then expected to fall by around £100 million in 2019. 

As of 09:06 GMT, Wednesday, 07 March, Rolls-Royce Holding PLC share price is 946.00p.

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