This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Shares in UK’s flagship engine manufacturer Rolls-Royce were +3% as the company announced it was cutting 4.6K UK jobs (8.4% of company workforce) to save a net £400M p.a. by end of 2020.
Company was quick to respond to market pressure to improve its financial stability after European Aviation Safety Agency highlighted reliability issues with its Trent 1000 engines. Improving in-service maintenance for engines that power the Boeing 787 Dreamliner will mean extra expenses and investors were welcoming the news that Rolls-Royce was keeping firmly on top of the issue.
Company’s engineering competence to improve engine reliability should not be impacted by the restructuring, with the job cuts coming from the corporate and support side of the organisation.
A leaner, meaner corporate structure would mean lean times for thousands of personnel losing their jobs, but the markets were happy that the new outlays were not being transferred on to them, with Rolls-Royce confirming FY group free cash flow guidance at £450M (+/-100M).
Artjom Hatsaturjants, Research Analyst, 14 June 2018
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
Comments are closed.