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Rolls-Royce dividend cut
Rolls-Royce announced that it would cut its annual shareholder payout by 39 per cent in response to slumping profits.
The company issued guidance at the close of 2015 that profits would decline this year and has been undergoing a series of cost-cutting measures, including the loss of 2,800 jobs last year and a further 800 set for 2016, to generate annual savings of up to £200m. Fifty of the company’s top 200 managers are set to go.
“We need to sustain a healthy balance sheet to ensure we have the financial flexibility to maintain a strong investment grade credit rating,” said chief executive Warren East.
Shares in the company rallied 14 per cent following the news, after declining by around 40 per cent since July 2015. It’s the biggest daily gain since 2008.
East added: “Despite steady market conditions for most of our businesses it will be a challenging year as we start to transition products and sustain investment in Civil Aerospace and tackle weak offshore markets in Marine.”
Image courtesy of Rolls-Royce
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