Rolls-Royce share price: Panmure Gordon analyst suggests £1bn fundraising

on Feb 4, 2016
Updated: Oct 21, 2019

Rolls-Royce Holdings’ (LON:RR) chief executive Warren East should scrap the group’s dividend, abandon its profit guidance and launch a £1 billion fundraising, an analyst at Panmure Gordon has suggested. The comments come ahead of the FTSE 100 company’s full-year results later this month when the troubled engine maker is expected to issue yet another profit warning.

As of 13:31 GMT, Rolls-Royce’s share price had fallen 0.39 percent to 511p. The shares are underperforming the benchmark FTSE 100 index which currently stands 0.30 percent higher at 5,854.78 points.
The Telegraph quoted Panmure Gordon’s analyst Sanjay Jha as saying today that launching a £1 billion fundraising would draw a line under engine maker’s troubles, which have seen it issue five profit warnings in the past two years. With the company set to post annual results next Friday, which Jha believes is likely to prompt further speculation over another profit warning, the analyst has called on the engine maker’s chief executive to act to prevent what he described as “death by a thousand cuts”.

“The key question is whether the management can pre-empt continued speculation regarding further profit warnings and concern over its balance sheet by taking the bold step of abandoning profit guidance and shoring up the balance sheet from future shocks,” the analyst told The Telegraph.
Rolls-Royce, which has been going through a difficult period, warned in November that its ‘profit headwinds’ for 2016 had increased to around £650 million, and signalled that it might cut its dividend payment to shareholders.
“We sense the consensus is that Rolls will warn for the sixth time with its 2015 results,” Jefferies said yesterday, as quoted by the Financial Times. The analysts expect the engine maker’s marine business to lose £80 million this year but encouraged investors to ignore the earnings hit and look towards when the offshore market bottoms “at or around zero in terms of orders”.
As of 14:28 GMT, Thursday, 04 February, Rolls-Royce Holding PLC share price is 512.50p.