The shares advanced by 13%, up 68.5p to 598.5p, as investors breathed a sigh of relief about the better-than-expected outlook.
“Rolls-Royce has been everybody’s whipping boy but this is not a company out of control,” Jefferies analyst Sandy Morris said. “Management have got this business under control and have it by the scruff of the neck. It makes you optimistic.”
Rolls, which makes engines for airplanes, ships and tractors, has failed to keep pace with an old-fashioned shift in customer shopping habits, as planemakers seek out smaller and more fuel-efficient engines, wiping out its lucrative engine maintenance sales.
It unveiled 2600 job cuts in marine and aerospace in November after warning profits would be £650 million lower in 2016. Rolls today said full-year profits for the year ending December 2015 were 12% down at £1.4 billion.
Since the carnage started California-based activist investor ValueAct has come on board as a major shareholder with a 10% stake to shake up the direction of the business. Rumours have also swirled about a possible takeover by rival US engineering giants and the Government stepping in to ring-fence its politically sensitive nuclear arm.
