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Rolls-Royce revival to take a bit longer

Thursday, May 05, 2016 - 01:31

British engineering company Rolls-Royce has reiterated its outlook for 2016 in a sign of stability after three profit warnings last year. But, as Hayley Platt reports, investors are worried about the length of time the recovery is taking.

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Investors will have to wait longer than expected for a decent return from Rolls Royce. The maker of jet engines signalling it wouldn't see the bulk of its profits until the second half of the year. And suggesting that earnings in the first half may just break-even. The news sent shares down 6 percent. (SOUNDBITE) (English) BGC PARTNERS, MARKET STRATEGIST, MIKE INGRAM, SAYING: "It's more like rollover royce, rather than Rolls Royce. And in an environment where there seems to be generally very little forward visibility on all sorts of issues, not least of which is the global economy then you can understand that perhaps investors aren't necessarily going to give them the benefit of the doubt and probably the reason why the stocks has been marked down more than 4 percent this morning." Rolls Royce, which makes engines for Boeing and Airbus, issued three profit warnings last year. They followed a fall in demand for aircraft servicing. And the cancellation of some orders in its marine and power-systems operations - due to weak oil prices. (SOUNDBITE) (English) BGC PARTNERS, MARKET STRATEGIST, MIKE INGRAM, SAYING: "A pick up in oil prices will have been a support but I think the rally that we've seen over the last three months or so is in the relatively early stages and of course there's a big question mark, certainly to my mind whether it's going to be sustained." Rolls Royce is in the midst of restructuring. It aims to make savings of between 150 million and 200 million pounds by cutting staff and streamlining management. CEO Warren East says the company is on track - helped by higher large aircraft deliveries - but investors may need convincing.

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Rolls-Royce revival to take a bit longer

Thursday, May 05, 2016 - 01:31