Rolls-Royce share price is in the spotlight today after the jet engine-maker delivered worse-than-expected annual results. The stock is also reacting to new asset-sale challenges in Norway. The RR shares jumped by more than 1% in early trading.
What happened: Rolls-Royce Holdings, one of the biggest jet engine manufacturers in the world, reported weak earnings. The company made a total loss of more than $5.58 billion in 2020 because of the pandemic.
While everyone expected the company to make a loss, results showed that it was worse than expected. Analysts were expecting the loss to be about 3.1 billion pounds. Still, its cash outflow of 4.2 billion pounds was in line with expectations. It now expects this figure to be 2 billion this year as the flying industry recovers.
This loss came as flying stopped last year as countries imposed lockdowns and closed their borders. Rolls-Royce Holdings’ business model was highly vulnerable because the company makes money through the number of flying hours.
Rolls-Royce share price is also reacting to news that Norway has stopped the sale of the company’s assets in the country. The company has been selling its Bergen Engine AS to TMH for about $150 million. Norway is rejecting the deal because TMH is owned by a Russian billionaire who is said to be close to Putin. The government said that the sale would have national security risks.
Still, looking ahead, it seems like RR has weathered the worst part of the Covid storm. More airlines are flying and the company will likely return to growth this year. This is the reason why the Rolls-Royce share price is rising today.
Early this week, I wrote that the Rolls-Royce share price could climb to 137p. On the four-hour chart, we see that the stock has formed what looks like an ascending triangle pattern. The resistance for this level is at 119p, where the stock formed a double-top pattern. In my view, the stock will likely break-out higher in the near term as bulls target the 137p, which was the highest level in December last year.
