MARKET REPORT: Chief’s ‘burning platform’ jibe rattles shares in Rolls
MARKET REPORT: Shares in Rolls-Royce fall after chief executive warns staff that company is ‘unsustainable’ and a ‘burning platform’
Shares in Rolls-Royce fell yesterday after the chief executive warned staff that the company was ‘unsustainable’ and a ‘burning platform’.
Tufan Erginbilgic, who took over at the FTSE 100 engineering group earlier this month, told employees in a global address that investors were getting fed up with weak performance, driving shares down 2.9 per cent, or 3.28p, to 110.2p.
‘Every investment we make, we destroy value,’ Erginbilgic told staff, adding that financially, ‘we underperform every key competitor out there’.
Sign of the times: Tufan Erginbilgic told employees in a global address that investors were getting fed up with weak performance
He also said the firm had reached an ‘unsustainable’ point.
‘It is at a level at which it cannot continue,’ he said. ‘Rolls-Royce has not been performing for a long, long time, it has nothing to do with Covid, let’s be very clear. Covid created a crisis, but the issue in hand has nothing to do with it.’
Rolls-Royce said it was ‘regrettable’ that these comments had been leaked to the media.
A spokesman said Erginbilgic ‘was honest about our financial under-performance compared with our peers, laid out his priorities for all of us and stressed the need for everyone within the business to work together in order for Rolls-Royce to succeed’.
Oil stocks in London ended the week on a high following positive data on the US economy and hopes over a recovery in demand across China.
BP rose 1.1 per cent, or 5.1p, to 489.3p and Shell climbed by 1.2 per cent, or 29p, to 2370.5p.
The FTSE 100 edged up 0.05 per cent, or 4.04 points, to 7765.15 and the FTSE 250 rose 0.6 per cent, or 119.88 points, to 20035.39.
LandSec sold its One New Street Square office property in London to the Hong Kong-based developer Chinachem Group for £349.5m. Shares in the blue-chip commercial property developer gained 0.9 per cent, or 6p, to 707.4p.
Mitchells & Butlers sank 1.2 per cent, or 2p, to 161p after City broker Jefferies downgraded the pub group’s rating to ‘hold’ from ‘buy’.
There was good news for On The Beach after holidaymakers jetted off during what is usually its quietest sales period.
The package holiday group reported that the total value of transactions in the last three months of 2022 were ahead of the same period in 2021. Bookings since Christmas were more than two-thirds higher than last year, On The Beach added. Shares gained 3.8 per cent, or 6.6p, to 181.6p.
Ingredients maker Treatt made a good start to its current financial year after sales in the three months to December were 9 per cent higher than the same period in 2021. The group added that its UK production capacity should at least double once a new facility is completed towards the end of this year. Shares, however, fell 0.3 per cent, or 2p, to 625p.
Serica Energy added 3.1 per cent, or 7.5p, to 252p after most of the North Sea producer’s shareholders voted in favour of its proposed takeover of rival oil and gas business Tailwind Energy at the general meeting.
One of the UK’s largest mortgage and loan providers hailed its ability to lend during a ‘quarter of extreme volatility for the banking sector’.
Paragon Banking reported that lending in the three months to December was nearly 22 per cent higher at £861.7m compared to the first quarter of 2022.
Shares rose 1 per cent, or 6 per cent, to 591p.
You Gov cheered a ‘resilient performance’ in the six months to January after business traded well in the US and UK.
As a result, the polling company expects to report robust sales and ‘top-line growth’ at the end of its financial year in 2023.
Shares inched up yesterday by 1 per cent, or 10p, to 1010p.
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