Rolls-Royce share price slides as group posts record £4.6bn loss

on Feb 14, 2017
Updated: Oct 21, 2019

Shares in Rolls-Royce Holdings (LON:RR) have fallen more than three percent in London this morning, as the blue-chip engine maker unveiled a record loss of £4.6 billion for last year, with a bribery settlement and the fall in sterling pressuring the group’s performance. The company, however, flagged ‘modest performance improvements’ this year.

As of 09:15 GMT, Rolls-Royce’s share price had lost 3.85 percent to 711.50p, underperforming the broader London market, with the benchmark FTSE 100 index currently 0.12 percent worse off at 7,270.23 points. The group’s shares have gained nearly 19 percent over the past year, and are up by more than seven percent in the year-to-date.
Rolls-Royce reported a loss before tax of £4.6 billion for 2016 when it updated investors on its full-year performance this morning, unveiling that it had written off £4.4 billion from currency related contracts, as the pound lost ground in the wake of the British referendum last year. The result further reflected the engine maker’s £671-million bribery settlement with UK, US and Brazil authorities.

Underlying profits meanwhile fell to £813 million, down from £1.4 billion in the prior-year period, while the group’s underlying revenue came in two percent lower £13.8 billion, reflecting weakness in the company’s struggling Marine division.
“Despite the significant market and aerospace product transition challenges identified in 2015, we have made operational progress and performed ahead of our expectations for the year as a whole,” Rolls-Royce’s chief executive Warren East commented in the statement. “Over the next few months we will conclude our review of our strengths and investment opportunities and set out an appropriate vision for the business and the best way we can deliver sustainable shareholder value.”

Rolls-Royce, which has been trying to recover from a string of profit warnings, expects “modest performance improvements” and is targeting free cash flow to be similar to last year.
“This is starting to feel a lot better than the depressing commentaries that surrounded the stock a year ago,” Andy Chambers, analyst at Edison Investment Research, commented, as quoted by City A.M.
Rolls-Royce announced a final dividend of 7.1p, in line with changes announced a year ago, resulting in a full-year dividend of 11.7p, down from the 16.4p paid for 2015.
As of 09:49 GMT, Tuesday, 14 February, Rolls-Royce Holding PLC share price is 703.00p.

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