Woodford reverses his Rolls Royce position

Neil Woodford has sold his stake in Rolls Royce after losing hope the company will turn around its fortunes.

Woodford reverses his Rolls Royce position

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The engine maker has issued a series of profit warnings over recent times and after holding the stock for ten years across his time at Invesco and with his own firm Woodford has called time on his investment. 

Writing for his firm’s website, Woodford said many investors have become frustrated with Rolls Royce’s inability to manage expectations.

“Over the last couple of years, Rolls-Royce has become a more challenged business and this has weighed significantly on its share price,” Woodford wrote.  “Some of these problems represented growing pains, as the business transitions between civil aerospace engine designs and invests in new capacity to deliver its substantial forward order book. The business has also suffered from the deteriorating global economic environment, particularly in its marine business which has been negatively impacted by the slump in oil industry exploration activity.”

Despite this situation Woodford had kept faith with the company, initially seeing share price weakness as an opportunity to add to the holding in the expectation that the ‘£80bn order book’ would deliver much improved profits and cash flows beyond 2017.

This faith was fractured however by the ‘very disappointing’ trading update issued by in November, Woodford said.

He warned that problems, which initially had affected the military aerospace and marine businesses, appear to have spread to the core civil aerospace business, and this is likely to hit profits and earning hard, leading to a dividend cut. 

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