Equities Update: Rolls Royce, Next…

It’s all systems go at Rolls Royce

Mark Crouch, Analyst at investment platform eToro, says: “When Rolls Royce CEO Tufan Erginbilgic took the wheel in January 2023 the company was floundering, marred by underperformance and struggling to recover from the shock of the pandemic. And yet, in just eighteen months these results show that Rolls Royce is once again firing on all cylinders.

 “A flurry of cost cutting initiatives and a concerted effort to tighten up on efficiency have underpinned the company’s lightspeed recovery. Rolls Royce is now generating £1.2bn of free cash flow, has slashed net debt and announced it intends to resume the dividend.

“Despite significant supply chain issues impeding the aerospace industry, Rolls Royce has been relentless in its approach, securing multiple new contracts with airlines to build and service their engines. The UK government’s decision to increase defence spending has further boosted revenues.

“The question is how much more room for growth is there? Plenty of hype surrounds Rolls Royce’s highly anticipated small nuclear reactors “SMRs” that moved into the final step of the regulatory assessment process this week.

“Thought to offer the solution in bridging the gap between net zero and the world’s growing energy demand. This innovation has the potential to turn a superb recovery into a spectacular one.”

Wet British summer no problem for Next

Adam Vettese, Market Analyst at investment platform eToro, says: “Despite fears that the disappointing British summer would rain on their results, Next has comfortably beaten expectations. With last year’s good weather being positive for clothing retailers, there were concerns that this year’s numbers would come in softer and albeit the UK sales numbers are modestly higher, overseas online sales are up a very robust 21.8%.

“Next is often considered a barometer of the UK retail consumer and if these results are anything to go by then it seems as though things are improving. Next has been fairly cautious with how much it has raised guidance and given in general first and second half performances are similar, the company might well go and beat estimates again if all goes to plan.

“Shares have been on a charge, up over 60% since the beginning of last year and sit just off record highs, investors will now be hoping this strong performance propels them through this ceiling and beyond.”