Rolls-Royce Holdings PLC

RR.: XLON (GBR)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	GBX 893.00	Xwpkf	Lcrfyrjv

Rolls-Royce CEO to Step Down as Guidance Disappoints

Joachim Kotze

Feb 24, 2022

Narrow-moat Rolls-Royce returned to profitability for financial 2021 and exceeded its cash flow guidance. However, news that CEO Warren East will step down at the end of the year, combined with weak financial guidance, disappointed investors and sent shares 18% lower. Guidance for low-single-digit revenue growth in 2022 and flat margins seems a bit light given the prospects for a recovery in wide-body aircraft flying hours, the key driver of group sales. We will adjust our near-term forecasts downward to account for this but expect only a modest impact on our GBX 115 (ADR: USD 1.60) fair value estimate as we maintain our medium-term assumptions.

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