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LONDON (Reuters) – Shares of Rolls-Royce (RR.L) fell 4% on Friday. It came after the company’s new CEO warned staff that the aerospace firm, one of Britain’s leading blue chip engineering groups, was a ‘flaming platform’. .
According to the Financial Times, Tufan Elginbirgic told staff at Rolls-Royce’s UK headquarters in Derby, central England, that the company’s performance was “unsustainable” and that a changing “last “I’m facing an opportunity,” he said.
Rolls-Royce, whose engines and systems are used not only in the Airbus A350 and Boeing 787, but also in ships, submarines and power generation, said its CEO spoke to staff about the “need to significantly improve Rolls-Royce’s performance.” .
A Rolls-Royce spokesman said in an emailed statement on Friday: “He has been honest about the company’s underperformance relative to its peers.”
Shares of Rolls-Royce, which hit a nearly one-year high before the Financial Times reported, are down 4% in morning trading. The current 109p is comparable to the 2014 high of 398p.
Rolls-Royce hit a crisis during the pandemic when most air travel came to a halt for months and then recovered only slowly. You get
Analysts also say US firm GE (GE.N), the main competitor in the wide-body aircraft sector, has historically made more money in aero engines.
Bernstein analyst George Zhao said comments from former BP executive Elgin Birgic, who took over as president on Jan. 1 after the retirement of Warren East, conveyed a sense of urgency and further restructuring. said it suggested that it would be
“The challenge is that there may not be an easy solution. There have already been many restructurings and asset divestitures under former CEO Warren East, and it is questionable how much more can be done. It is done,” said Zhao.
East, who spent seven years as CEO and brought himself in to turn the company around, implemented two major transformations in 2018 and 2020.
In 2020, East announced plans to cut 9,000 jobs or a sixth of its workforce, and also launched an asset sale program that has raised £2 billion ($2.5 billion) by September 2021.
Over the past three months, Rolls stock has surged 43%. This was underpinned by strong travel demand and the reopening of China’s economy.
Erginbilgic’s comments sent the stock down.
“People may start to think you’ve seen things that we don’t know,” said one analyst who was not authorized to speak to the media.
The UK owns a golden share in Rolls-Royce, meaning the government can block a takeover. The arrangement reflects the company’s importance to Britain’s military capabilities.
($1 = £0.8087)
Reporting by Sarah Young Editing by Mark Potter
Our standards: Thomson Reuters Trust Principles.
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