Rolls-Royce chief aims to woo the City with turnaround plans

Rolls-Royce chief executive Tufan Erginbilgic is looking to woo the City next week, as the company unveils its turnaround plan at a key Capital Markets event on Tuesday.

Rolls has undergone a remarkable shift in fortune this year following a torrid performance throughout the pandemic era, which saw the company in a brush with bankruptcy.

The engine manufacturer’s share price has soared since January by a whopping 143 per cent, as it benefits from increased global defence spending and resurgent demand for international travel.

Dubbed ‘Turbo Tufan’, Erginbilgic has been leading the turnaround following longtime chief Warren East’s departure in late 2022 – the announcement of which wiped £1.5bn off the company’s value.

The outspoken boss, who nurtured his reputation at oil giant BP, has berated the company’s previous performance, stating in May it had been  “grossly mismanaged,” and was a “burning platform” that needed to cut debt and improve profits.

An aggressive cost-cutting strategy, including the slashing of 2,500 jobs worldwide, has been a critical pillar of his bid to take the business to greener pastures.  Tuesday will likely reveal cost savings targets at the company’s four divisions, as well as some medium-term financial targets.

Erginbilgic is also expected to push the government to give further backing to cutting edge nuclear technology, which it claims would drastically reduce wholesale energy costs.

Rolls-Royce has been granted £200m in funding so far to develop the mini nuclear reactors, known as SMRs. It is understood Erginbilgic believes overseas competition could catch up on its market leading technology without further support.

The government has launched a bidding competition to pick the country’s SMR provider, which has included the likes of EDF, GE-Hitachi and Holtec Britain.

Successful companies will be announced next spring, with contracts awarded in the summer, but reports suggest Erginbilgic will argue the process must be sped up.

The FTSE-100 listed firm said in 2020 that fully fledged commitment from government to the mini reactor’s would generate 40,000 jobs over the next 15 years.

Deutsche Bank analyst Christophe Menard believes targets set at the Capital Markets Day will be “bold enough” to make it a “welcome revolution” for the company, raising his price target to 310p.