Aircraft engine maker Rolls-Royce (RR.) soars to the top of the FTSE 100 as its underlying profit grows for the first time since 2013 and beats expectations.
The shares are up 11.8% to 927p after the company announced 2017 profit of £1.2bn, 19% ahead of consensus, and free cash flow of £273m against expectations for just £129m.
Rolls has been on a long road to recovery since the former head of UK tech champion ARM, Warren East, took over as chief executive in 2015.
East has stripped costs out and simplified the business but still has more to do, announcing an expanded restructuring which will look to eliminate any remaining duplication in its management structures.
MARINE ARM COULD BE SOLD
The one unit to show a decline in profits, the marine arm, is under review with a sale among the options being considered.
The company is also having to fork out cash to deal with durability issues on its Trent 1000 and Trent 900 engines.
Noting the remaining issues the company has to address, AJ Bell investment director Russ Mould comments: ‘Today marks an important milestone in the company’s recovery although there is still the risk of further turbulence.’
The market should get some insight into the progress of the renewed restructuring when the company holds a capital markets day on 15 June.
