The results of the review come after the troubled engine maker warned earlier this month that its “profit headwinds” for 2016 had increased to around £650 million, and signalled that it might cut its dividend. RBC Capital reaffirmed a “sector perform” rating and set a GBX 850 ($12.86) price target on shares of Rolls-Royce Holding PLC in a research report on Tuesday, July 28th.
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Rolls-Royce Holdings Plc plans a “major restructuring” as the embattled aircraft-engine manufacturer’s new chief executive officer moves to streamline senior management, lower fixed costs and speed up decision-making.
According to East, the group is undergoing an unprecedented period of change not only in its mix of business and how it accounts for that, but also in its industrial footprint as the firm invests in a “wide-ranging transformation” in order to deal with a change in demand for products, including a doubling of its large engine output.
He had already announced some of the plans, including the cost-savings of 150 million pounds to 200 million pounds per year he is targeting.
He said his review had “highlighted a number of areas where we can simplify the way we work”, improving decision-making and operational effectiveness as well as financial structuring.
“This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long-term opportunities before us”.
Rolls-Royce’s chairman Ian Davis added that the board was committed to providing East with the support he needed to implement the findings of his review. The latest, on November 12, was its fifth in less than two years.
Shares in Rolls rose 0.5p to 569.5p in the first hour of London trading. Finally, Haitong Bank reissued a “neutral” rating on shares of Rolls-Royce Holding PLC in a report on Thursday, September 17th.
‘Group action is being taken, the global defensive backdrop has turned in the company’s favour, whilst activist investor ValueAct is now applying added pressure for change.
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“Nonetheless, and following a series of profit warnings, real evidence of improvement is now required, with current analyst consensus opinion for a weak hold unlikely to change just yet”.
