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By Bloomberg

Rolls-Royce Holdings Plc cut its full-year profit guidance and halted a share buyback to preserve cash, days after new Chief Executive Officer Warren East took over at the U.K. manufacturer of aircraft engines and marine products.

Pretax profit will reach 1.3 billion pounds ($2 billion) to 1.47 billion pounds, down from a previous estimate of 1.4 billion pounds to 1.55 billion pounds, the company said in a statement Monday. Free cash flow may be negative at 150 million pounds and reach 150 million pounds at best, down from an earlier plan of as much as 350 million pounds.

Rolls-Royce slumped as much as 9.6 percent in London trading. East, an engineer who has worked in the semiconductor industry, is halting the 1 billion-pound share buyback program at the halfway mark and said that the company will need to deepen a restructuring at the marine unit, which has suffered as the slumping oil price prompts customer in the offshore industry buy less equipment.

“It’s known as the ’new-man risk,’” said Zafar Khan, an analyst at Societe Generale in London. “The new CEO has been in the job only for days, so some people had been thinking he’d want to cut expectations.”

Engine Transition

Rolls-Royce fell as much as 82.5 pence to 774 pence in London, the biggest drop since Oct. 2014, when the company said that sales would fall. Before today, the stock had lost about 1.5 percent in value this year.

The jet-engine unit, Rolls-Royce’s largest by revenue, has been challenged by a product transition on the Airbus A330 wide- body airliner, the company said.

Rolls-Royce’s Trent 700 is one of three engine choices for Airbus’s A330, though the British company has won more than three-quarters of competitions to power that plane in recent years. The U.K. company was picked last year by Airbus as the exclusive provider on the upgraded A330neo, and will supply the Trent 7000 engine that’s more efficient.

Airbus had to cut the monthly production rate of its existing A330ceo from 10 a month to six because demand for the plane had been slack.

Marine Woes

In addition, lower-than-expected demand for engines to power business jets in emerging markets and a softening regional aftermarket will also adversely impact profit. Those effects will lead to a 300 million-pound hit on profit at the subsidiary in 2016.

The drop in cash-flow guidance is due to lower revenue from the marine division because of falling demand and as the drop in oil prices makes it harder to secure advance deposits from customers, Chief Financial Officer David Smith said on a call. The business has a “pretty comprehensive plan” for continued restructuring, which will lead to one-off charge of as much as 100 million pounds for the full-year, the CFO said.

East took over from John Rishton, who stepped down after several profit revisions on his watch. Rishton came under fire from investors in his final months for poorly communicating previous guidance changes with shareholders. The internal review ahead of the release Monday had been concluded only over the weekend, the new CEO said.

“We’re bringing this news to the market now a little earlier than you might have expected to see from Rolls-Royce in the past,” East said.