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Rolls-Royce Jumps Most Since 2002 After East’s Profit Surprise

  • Shares surge close to 20 percent as CEO’s cuts take effect
  • Aero-engine giant’s earnings still 76% down on a year earlier

Rolls-Royce Holdings Plc surged after the aircraft-engine maker dogged by a succession of earnings shocks in recent years posted a first-half profit that beat estimates as Chief Executive Officer Warren East’s savings program kicks in.

Shares of London-based Rolls rose almost 20 percent Thursday, the most in close to 14 years, after it reported an adjusted pretax profit of 104 million pounds ($124 million) following analyst forecasts for a 19 million-pound loss.

The company, which previously endured five profit warnings in less than three years, has now gained more than 50 percent since the start of 2016 after its market value slumped by about one-third in each of the past two years.

East, who is cutting jobs and reorganizing the business after taking over last July, said he’s confident that a ramp-up in wide-body engine deliveries combined with higher service revenue will enhance gains in the second half. Savings benefits of 50 million pounds from the turnaround plan are expected this year out of 200 million pounds targeted through 2017, he said.

“We have taken some positive first steps,” said East, who had predicted the company would be close to break even in the first six months. “Order intake has been good and, although known headwinds constrained revenue and profit in the first half, the business remains well...


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