MARKET REPORT: Rolls-Royce shares fired up by turnaround plans

Rolls-Royce shares hit a new 15-month high amid growing hopes that a long-awaited turnaround is finally on the horizon.

After gaining nearly 24 percent yesterday on an optimistic set of results, the stock rose another 2.2 percent, or 2.94p, to 136.04p.

That was the highest level since November 2021 and brought the profit for this year to 50 percent, making Rolls one of the best performing blue chips of 2023 so far.

The rally came after Rolls broke forecasts with a profit increase of 57 per cent in 2022 to £652 million.

In addition to the optimistic results, CEO Tufan Erginbilgic – whom Rolls described as a “burning platform” shortly after its takeover in January – hinted at a major upheaval for the company as he tries to return it to its former glory.

“No company can continue like this and that is why we have to change,” he stated.

The FTSE 100 fell 0.4 percent, or 29.06 points, to 7878.66 and the FTSE 250 fell 0.5 percent, or 93.96 points, to 19696.53. Gambling stocks took a hit yesterday as white paper uncertainty continued to loom.

The gaming review, which seeks to modernize industry rules, has been delayed for almost two years due to government instability and department realignments.

Conservative MP Stuart Andrew was appointed this week to oversee the review, but there are no specific dates for when the paper will be released.

The lack of transparency has worried investors.

It is feared that a review could lead to strict rules on online gambling and checks on player affordability, ultimately leading to lower revenues for the gambling giants. It is said that the newspaper will not be released until after the Easter recess.

Shares in Ladbrokes owner Entain fell 3.6 percent, or 48.5 pence, to 1306.5 p. Rival Flutter, owner of Paddy Power, dropped 6.2 percent, or 860p, to 13065p. 888 meanwhile fell 2.6 percent, or 1.85p, to 69.05p.

Mining stocks fell on a slump in metal prices. Anglo American lost 5.4 percent, or 163.5p, to 2846p, Antofagasta fell 2.7 percent, or 42.5p, to 1540p, and Rio Tinto lost 2.9 percent, or 169p, to 5667p.

It was a positive end to the week for M&G after the investment group rose the highest of blue-chip stocks. City analysts said the gain was most likely driven by the positive read-across of Jupiter’s results and reignited rumors that M&G could be a takeover target for one of the larger asset managers. Shares rose 7 percent, or 13.8 pence, to 211.3 pence.

IOG plans to appoint Esa Ikaheimonen as interim chairman after Fiona MacAulay said she would not be seeking re-election at the North Sea oil and gas company’s annual general meeting in May. Shares fell 2.7 percent, or 0.14 pence, to 5.1 pence.

At the same time, Avation soared as it said results for the year to June 30 would be “significantly ahead” of market forecasts.

The Singapore-based company, which owns aircraft such as the Airbus A320, used by the likes of Easyjet (2.5 percent, or 12.1 pence, to 476.9 pence), published the positive outlook after lower operating costs, improved income and a return on investment. City broker WH Ireland expects Avation to post annual revenues of £93m and profits of £86.2m. Shares rose 7.8 percent, or 9 pence, to 124.5 pence.

Meanwhile, Future’s outgoing boss will become Trustpilot’s chairman on April 3. Zillah Byng-Thorne, who became chief executive of the magazine publisher in 2014, will replace Tim Weller when he steps down from the customer review website after ten years. Prospective investors pushed the stock by 3.2 percent, or 45p, to 1383p. But Trustpilot shares gained 1.3 percent, or 1.3p, to 99.25p.