No surprises that today's 'Group update' did not provide a definitive 'this is what we are doing' update. More numbers and words on the plan/progress will be forthcoming at another capital markets day in six months or so. The chairman set the tone with early observations including:
‘under no illusions’
‘we get it’
‘improvement in our financial and operational performance’
‘improve our internal controls…communication…absolute priority’
‘long term this is a growth story’
As for the core of the presentation from the newish CEO Warren East (formerly CEO of UK tech high flyer ARM Holdings) he said all the right things noting that over 80% of the business was in 'attractive growth markets'.
Of course disproportionately this is focused on the widebody aircraft engine business where investors have hoped for this...
...but via a combination of poor company communication and the inevitable issues with lumpy businesses with 15-40 year cash flows (noted by the CEO akin to some of the charts shown in ARM presentations!)...
...there has been too much surprise at patchy cashflows following new product introduction supplemented of course by those cyclical lumpy factors that have impacted the other divisions (marine, defence, business jets).
To horribly summarise the presentation reiterated need to communicate effectively the sheer potential of the whole portfolio...as shown by the heightened cash flow of a matured widebody business (a further - and even more impressive implied cash flow chart - was shown for the 10 year period).
Of course you cannot just hang around and wait for the cashflows. As the activist shareholder has noted refining the cost case is kind of sensible too. There were not too many answers here - they will follow next year - but clearly you should anticipate much if any of a dividend as they transition.
Yes the shares bounced (+3%) as there was nothing newly dire here but there is still everything to play for. Stay in for the long term or don't invest at all.