Investors fled Rolls-Royce Holdings PLC (LSE:RR.) this morning, with the company’s share price collapsing more than 19% as chief executive Warren East announced he would step down in the midst of a gloomy outlook.
The drop marked the steepest fall since the onset of the pandemic, as the announcement of East's departure accompanied earnings.
Shares in Rolls-Royce were down 12.52% to 102.98p in early deals despite the group's return to profit and a heavy reduction in cash burn.
“There have been challenges, but we have built on the cultural and organisational improvements we have made to work through them, deliver on our commitments and create a better business,” East said in a statement.
“We have simplified the Group, fundamentally improved our underlying operations and driven long-term change."
Investor sentiment was cooled by a revenue growth outlook for 2022 of less than 10%, with the company’s profit margin expected to be “broadly unchanged”.
East’s seven years at the helm of Rolls-Royce was plagued by turbulence, as he worked to cut down inefficiencies that included the company’s chief people officer telling investors in 2018 that three employees flew to the South of France to erect a sign.
Part of those turnaround plans involved Rolls-Royce cutting more than 9,000 jobs last year as part of a restructuring programme that generated run-rate savings of £1.3bn, beating its target a year ahead of schedule.
But air travel has been slow to pick up following the pandemic, with Roll’s-Royce’s civil aerospace revenue still 44% below 2019 levels.