Wednesday, 2 February 2011

Rolls-Royce swinging low ahead of Preliminary Results.

At 4:15pm:
Rolls-Royce @ 625p, -13.5 (-2.1%)

With Rolls-Royce due to report its preliminary results on the 10th Feb 2011 it is a bit disconcerting to see the share price continuing to see-saw quite wildly.
Down another decent chunk today but stabilising at 625p.

Couple of bits of good news weighed down by one not so good (but should it have been anticipated?).

- First the good news, an order from Sichuan Airlines (announced by R-R website) has been won by the International Aero Engines consortium of which Rolls-Royce is a senior shareholder. The order, to equip 12 Airbus A320's with V2500 engines, is worth $100m to Rolls-Royce.

- A Total Care agreement has been set up with Malaysia Airlines (also on R-R website) to support a fleet of 17 Boeing 777 aircraft equipped with T800 engines.

And now for the not so good. Embedded at the bottom of a general article on the Centre for Asia Pacific Aviation is a segment which forecasts Quantas profits to be 10% lower. The segment is based upon an analysts note from our friends at RBS but goes on to suggest that the A380 incident will cost Quantas AUD80m and that it is expected that R-R will cover 75% of that cost at some point in the next year.

At present Sterling is weak against the Aussie dollar at AUD1.60793 so that translates to £49m for a company forecast to make £1.08bn pre tax in 2011-12 and at 31 Dec 2009 had £2.96bn of cash on its books.

Hopefully this is a another case of short term sentiment v long term outlook.

I have also brought up an updated version of the chart that I used in a previous post (Rolls-Royce / BAE Systems: Britain reviews defence contract rules. ) to illustrate the trend and trading range that R-R shares appeared to be following. 
Despite the volatile swings this appears to be still intact (although I am not a Technical Analysis expert) but it remains to be seen what the results might bring on the 10th Feb.
R-R Trend and Trading Range share of Sichuan Airlines V2500 order worth $100 million signs TotalCare services agreement with Malaysia Airlines airberlin, easyJet, Tiger Airways Australia and Virgin Blue lower profit expectations

Chart courtesy of Digital Look

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