Rolls-Royce share price heads south as boss warns on deliveries

on Jun 9, 2016
Updated: Mar 11, 2020

Shares in Rolls-Royce Holdings (LON:RR) have fallen deep into the red this morning after the group’s chief executive warned staff that the engine maker was running behind with deliveries to customers. The news marks the latest blow for the company which is currently trying to recover from a string of profit warnings.

As of 08:28 BST, Rolls-Royce’s share price had fallen 3.27 percent to stand at 591.50p, as compared with a 0.56-percent dip with the benchmark FTSE 100 index. The group’s shares have lost nearly 40 percent of their value over the past year, but are up some three percent in the year-to-date.
The Financial Times reported yesterday that Rolls-Royce’s chief executive Warren East had warned staff that the company was running behind with deliveries to customers, and urged employees to redouble their efforts to ensure that challenging profit targets for this year were hit. While he insisted that the business remained “in reasonable shape with opportunities and issues broadly balanced,” he cautioned that delivery issues meant that “there is a lot to do in the second half and hence a higher risk”.

His comments follow the group’s annual general meeting last month when the engine maker said that its free cash flow was expected to be significantly more weighted towards the second half than last year, reflecting the lower level of first-half profit.
East’s warning comes against the background of an ongoing restructuring at the group which faces yet another round of job cuts. Several people inside Rolls-Royce, as well as some suppliers told the FT that while the restructuring programme was widely acknowledged to be necessary, the serial cuts were beginning to affect morale.
“People don’t know if they will have a job,” one person pointed out. Rolls-Royce is scheduled to post its half-year results on July 28.
As of 08:45 BST, Thursday, 09 June, Rolls-Royce Holding PLC share price is 589.50p.