Rolls-Royce pursues £1bn share buy-back

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Rolls-Royce is to undertake a £1 billion buy-back of its shares, partly because the company has no planned acquisitions following the sale of its Energy gas turbine business.

Chief executive John Rishton says the company, which is divesting the business to Siemens, is to return the proceeds of the £785 million ($1.3 billion) sale to shareholders.

Rishton says that “no material acquisitions are planned”.

Rolls-Royce’s share price has fallen by around 20% since the beginning of the year, and the stock is trading at around £10. The company has a market capitalisation of around £20 billion.

The company is to hold a briefing for investors today during which it will confirm its financial guidance for 2014 and 2015.

Although Rolls-Royce’s share price was knocked earlier this month by Emirates’ decision to cancel 70 Airbus A350s – powered by Trent XWB engines – the manufacturer will state at the briefing that it expects to deliver more than 4,000 Trent engines by 2023.