Market Report: Rolls-Royce rises as boss Warren East axes 400 jobsComments Off on Market Report: Rolls-Royce rises as boss Warren East axes 400 jobs
Warren East has been quietly sharpening the axe at Rolls-Royce since his arrival in July and the new chief executive has finally wielded it.
Up to 400 jobs at the beleaguered jet engine maker’s marine business are to go, on top of the 600 cuts announced in May — a move Rolls expects will save it £40 million.
The firm’s share price has lost a third of its value since April: when East arrived in July it announced its fourth profit warning in 18 months as the slump in oil eats into profits.
It’s a victory for US activist investor ValueAct, which emerged as a 5.4% shareholder in July and urged Rolls to focus on its aircraft division.
The shares flew 20.5p higher to 725p, a rise of almost 3%, but not enough to put it high on the blue-chip leaderboard.
Elsewhere shares continued to surge, with the FTSE 100 rising by 118.42 points to 6248.40.
Friday’s US jobs data, widely considered to be terrible, filled investors with confidence that the Federal Reserve will now not raise American interest rates until well into 2016, and a cut to the World Bank’s growth forecasts for China fuelled hopes of economic stimulus for the slowing Asian superpower.
That boosted shares in the industrial miners, including Anglo American, up 14.4p at 568p, and BHP Billiton, 20.5p better off at 1062.5p, which are heavily dependent on China’s growth for demand.
Shares in beaten-up Tesco were up 6.35p at 186.2p as the City wagered that the supermarket’s half-year results on Wednesday will reveal progress in chief executive Dave Lewis’s turnaround.
In a sea of blue on trading screens, AB InBev takeover target SABMiller — 12p sweeter at 3755p — was among the lowest risers, and ITV was 2.6p brighter at 250.4p as investors shrugged off England’s early exit from the Rugby World Cup, with analysts suggesting all the advertising slots will already have been booked.
On AIM, e-commerce tiddler CloudBuy slumped 4.38p or 23% to 14.38p as it resumed trading after finding a new nomad.
Chairman Ronald Duncan also chose not to buy back the shares lent to Equities First in exchange for funds he said were to renovate his new house.
It effectively means he dumped 2.25 million shares at well above the present share price, mirroring a move made by Rob Terry, shortly before his departure from Quindell.