LONDON: British engineer Rolls-Royce cut profit expectations for the third time in nine months, increasing the challenge for its new chief executive.
Shares in the 131-year-old company dropped as much as 10 percent after it also scrapped a plan to buy back 1 billion pounds ($1.6 billion) of shares halfway through the program.
Rolls-Royce has been struggling for some time with a drop in demand from energy customers for its marine equipment following a plunge in oil prices. But the firm said on Monday its aircraft engine business was also suffering during a switch from its Trent 700 engine to the newer Trent 7000, with fewer of the legacy engines being sold than anticipated.
That turns up the heat on new CEO Warren East, who took the helm only four days ago. The aerospace business accounted for almost half of 2014 revenues and has been riding a surge in demand for fuel-efficient engines for passenger jets, though it has lagged rival General Electric on profit margins.
Hargreaves Lansdown analyst Keith Bowman said that while it was common for new CEOs to cut expectations, the warning was another blow for investor trust in Rolls-Royce.
“The company’s prior push to reduce earnings volatility and surprises looks to have been completely unwound, with investors today suffering another shock,” he said.
DOWNGRADES
For 2016, Rolls-Royce said lower demand and pricing for the Trent 700 engines, reduced demand for its business jet engines and some weakness in its after-sales business for smaller jet engines would cut profit estimates by about 300 million pounds — reducing analysts’ consensus forecast by around 20 percent.
For this year, underlying pretax profit would come in between 1.325 billion and 1.475 billion pounds, as much as 5 percent lower than its previous guidance, it said.
Rolls-Royce cuts profit forecasts as new CEO takes the helm
Rolls-Royce cuts profit forecasts as new CEO takes the helm
Global investors commit more than $3bn to King Salman Park as Saudi giga-project secures new deals
RIYADH: The King Salman Park Foundation has secured more than $3.8 billion in new private-sector commitments at the MIPIM 2026 real estate conference, including a landmark $3 billion fund backed by international investors to develop a major mixed-use district in the heart of Riyadh.
According to a press release, the announcements bring total committed investment in the 17.2 sq. kilometers urban regeneration project to over $5.3 billion across five major packages.
Launched in 2019 under Saudi Vision 2030, the development is designed to be the world’s largest city park and aims to boost green space, improve quality of life, and feature over 1 million trees and extensive leisure facilities.
A $3 billion metro-connected district
The largest of the two packages, designated Package 5, will see a consortium led by Kolaghassi Development Co. deliver a residential-led district with a total built-up area exceeding 1 million sq. meters.
It will provide approximately 3,700 residential units, a K–12 school, around 300 hospitality keys and more than 100,000 sq m of Grade A office space alongside a wide variety of retail and dining offerings.
The development is supported by a Saudi-domiciled, Capital Market Authority-regulated fund managed by Mulkia Investment Co. that has attracted leading investors from the Kingdom and across the world.
Kolaghassi Development Co. will lead the project alongside Al Othaim Investment, one of the Kingdom’s real estate players, and RXR, a New York-headquartered real estate investor and operator.
“Securing investment of this scale, supported by international capital and expertise, is an important milestone for King Salman Park,” said George Tanasijevich, CEO of King Salman Park Foundation.
$850 million cultural district package
In a separate announcement, the Foundation confirmed the award of Package 4 to a consortium led by Retal Urban Development Co., with support from a fund managed by SAB Invest.
The project has a total value exceeding $850 million and will host more than 600 residential units, over 140 hotel keys, and almost 50,000 sq m of Grade A office space, alongside curated retail and food and beverage experiences.
“This opportunity reflects the maturity of Saudi Arabia’s real estate investment landscape and our confidence in culture-led, mixed-use urban destinations as a driver of sustainable returns,” said Abdullah Al-Braikan, CEO and founder of Retal Urban Development Co.
Ali Al-Mansour, CEO of SAB Invest, said the fund structure brings together “long-term capital, experienced development partners, and a shared commitment to place-making excellence” while contributing to Riyadh’s cultural vibrancy and the Kingdom’s quality-of-life ambitions under Vision 2030.
