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Rolls Royce shares dive as JP Morgan warns that small nuclear reactors will not be profitable

 The new markets business of Rolls-Royce, focusing on electrical power for
small aircraft and taxpayer-backed small modular nuclear reactors, could be
lossmaking into the 2030s, a broker has warned, pushing the engineering
group’s share price lower.

Rolls-Royce announced changes to its reporting
structure at its full-year results in February, including the creation of
its new markets unit, which is pursuing opportunities from the transition
to net zero.

In an equity research note to clients yesterday, JP Morgan
Cazenove said the venture “offers good long-term sales potential but
there is no guarantee of good profits”. Rolls-Royce secured £490 million
of funding last year, including about £50 million provided by the company
and £210 million from the government, to help to support investment in the
design of the small modular reactors (SMRs). JP Morgan said demand could
“grow strongly as countries seek to cut emissions and increase ‘energy
security’.

But SMRs need to compete with other energy sources and we see
a high risk of the first SMRs being well over budget.”

Times 13th April 2022

https://www.thetimes.co.uk/article/shares-slide-as-broker-casts-doubt-on-rolls-royces-green-venture-dv2wx8b3q

 Rolls-Royce dives as JP Morgan casts doubt on its plans for mini nuclear
power stations and electric planes.

 This is Money 12th April 2022

https://www.thisismoney.co.uk/money/markets/article-10712161/MARKET-REPORT-Rolls-Royce-dives-JP-Morgan-downgrade.html

April 14, 2022 - Posted by | business and costs, UK

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