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Rolls-Royce warning

Rolls-Royce’s new CEO has given a stark assessment of the engineering group’s prospects, telling employees it must transform the way it operates or it will not survive.

The Financial Times reports that in a global address to staff, Tufan Erginbilgic warned that investors were losing patience with the FTSE 100 group.

“Every investment we make, we destroy value” he told employees, adding that financially “we underperform every key competitor out there.”

Speaking at the company’s Derby manufacturing site Erginbilgic who took over as CEO this month described the company as a “burning platform.”

He said the business needed to change fundamentally and that no business generating low returns should be in its portfolio.

“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” he stated.

“Given everything I know talking to investors, this is our last chance” he said.

4.30pm: London clings on to gains

Sainsbury’s shares rose 11.3p (4.72%) and topped the FTSE 100 after Bestway built a 3.45% stake in Britain’s second-largest supermarket group, but said it is not considering a takeover offer (see below).

Direct Line fell 4.45p (2.49%) after the company announced that CEO Penny James was leaving.

Clothing retailer Superdry plunged 26.40p (17.69%) after cutting its profit forecast for the year as its wholesale division underperformed.

Nearly-new car seller Motorpoint was 2p (1.38%) higher despite flagging weaker demand and saying a drop in the value in electric vehicles and fewer car finance deals will hurt profits.

The FTSE 100 turned lower late in the session, but clung on to close 4.04 points higher at 7,765.15.

7am: Direct Line CEO quits

Penny James has resigned as CEO of Direct Line Insurance group with immediate effect following a sharp decline in its value over the past year and erosion of its balance sheet.

Full story here

7am: YouGov optimistic

Clients spending on strategic market research helped YouGov, the international research and data analytics group, perform well during the six months to the end of January, with continued growth across most divisions and geographies.

The US remains a major growth driver with large market opportunities continuing to accelerate in key sectors, including technology. Demand in the UK has picked up despite recessionary market conditions with the commercial teams delivering a strong performance in the first half.

The board said it is cautiously optimistic on the group’s prospects for FY23 and the sales pipeline remains healthy going into the second half of the year.

“Consequently, the company remains confident of achieving top-line growth for the full year in line with current market expectations, with margin expansion despite continued investment aimed at positioning the business for further growth in the next strategic growth plan.

As previously disclosed, Stephen Shakespeare will succeed Roger Parry as non-executive chair. The board is working with the executive search firm Egon Zehnder on the search for a CEO.

7am: Sainsbury’s stake acquired

Sainsbury’s has today noted that Bestway Group has acquired a 3.45% stake in the supermarket chain but has stated it has no intention to launch a bid.

Full story here

7am: On the Beach

On the Beach Group said bookings in the first quarter of the fiscal year were higher than last year leaving the group with a healthier forward order book.

Ahead of today’s AGM it said: “Although the first quarter is historically the quietest trading period, group total transaction value for October, November and December 2022 exceeded the comparative months in fiscal year 2022.”

The balance sheet remains strong and investment has been ramped up to support the strong sales growth.

Global markets

Investors in London were looking to build on yesterday’s agains after Wall Street rallied on the back of a US GDP figures which beat market expectations.

The US economy continued to grow in the final three months of 2022, at a pace slightly above expectations, according to the US Bureau of Economic Analysis.

The Dow Jones Industrial Average closed up 0.6%, the S&P 500 up 1.1%, and the Nasdaq Composite up 1.8%.

In London the FTSE 100 index closed up 16.24 points, or 0.2% at 7,761.11, though it is down 0.1% for the week so far.