Share

Rolls-Royce blames sanctions for profit miss

London - British engineer Rolls-Royce warned that it would not return to growth next year, having previously said that it would, as economic conditions have deteriorated and customers were delaying decisions.

Rolls said on Friday it now estimated that underlying profit would be flat to 3% lower next year compared to the expected outcome for this year, with underlying revenue in the range of 3% higher to 3% lower.

The company also said that its results this year would be affected, guiding that underlying revenue would be between 3.5% and 4% lower, against earlier expectations for flat revenue.

This year's annual underlying profit, however, would still be flat compared to 2013, excluding adverse foreign exchange movements and a one-off charge in its marine business, due to improved cost performance.

Rolls, the world's second-largest maker of aircraft engines behind US group General Electric, blamed worsening economic conditions and tightening Russian trade sanctions for hitting next year's results. It said orders were being cancelled and delayed in its nuclear and energy and power systems businesses.

The profit warning for next year is the second blow to investors in the company in 10 months.

The group disappointed the market in February when it said US and European spending cuts in defence would result in flat profits in 2014, bringing over a decade of profit growth to an end.

Until then the company had enjoyed 11 years of strong profit and revenue growth as soaring demand for more fuel-efficient engines for passenger planes made by Airbus and Boeing boosted its civil aerospace unit, which accounts for about half of its sales.

The company also on Friday issued medium-term guidance, saying it expected group return on sales of 13.5% to 14.5%.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.99
-0.3%
Rand - Pound
24.07
+0.2%
Rand - Euro
20.58
+0.0%
Rand - Aus dollar
12.36
+0.5%
Rand - Yen
0.13
+0.7%
Platinum
902.95
+0.1%
Palladium
998.75
-0.7%
Gold
2,153.42
-0.3%
Silver
24.92
-0.5%
Brent Crude
86.89
+1.8%
Top 40
65,837
-0.6%
All Share
72,075
-0.5%
Resource 10
53,082
-0.4%
Industrial 25
99,417
-1.1%
Financial 15
16,638
+0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders