Business

Neil Woodford sells Rolls-Royce stake

Rolls Royce Engine Image copyright Getty Images

Star fund manager Neil Woodford has sold his stake in the engineering firm Rolls-Royce, saying he has lost his confidence in the business model.

In a blog, Mr Woodford said that November's disappointing trading statement had prompted the move.

He did not disclose the size of the stake but reports suggest that it was worth 2.2% of the company, or £232m.

Rolls, which has issued five profit warnings in two years, said action was being taken improve the business.

The new chief executive, Warren East, has said he will reorganise the company to "simplify the organisation, streamline senior management, reduce fixed costs" and speed up decisions.

Mr Woodford, who has held Rolls-Royce shares for almost 10 years, said the downgrades to profit and cash expectations, and a likely dividend cut in 2016, had shaken his confidence in the investment case.

He said that problems that initially affected the military aerospace and marine business had spread to the main civil aerospace division.

'Headwinds'

However, Mr Woodford, considered one of the UK's best-performing fund managers, said he would stay in close contact with the company "in order that we can monitor progress under the new leadership team which we rate highly".

A Rolls-Royce spokesperson said the company did not comment on individual analyst or investor opinions, but went on to say that "[chief executive] Warren East has made very clear his confidence in Rolls-Royce as a great business with significant growth potential".

"We are strongly positioned in attractive markets, with a record order book and are on course to increase our share of the global installed base of widebody aircraft to over 50%," the statement said.

"We are also undergoing a process of industrial transformation which will make us a stronger business in the long-term.

"While we are suffering the impact of short-term headwinds in several of our markets, action is being taken to make the business more resilient and sustainable through our ongoing wide-ranging restructuring."

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