Rolls-Royce also said underlying pretax profit is expected to have been GBP390 million and GBP430 million in the six months to end June, or around 30% of the expected full-year amount, compared with 40% in 2014.
Advertisement
Engineer Rolls Royce was the worst-performing FTSE 100 stock, falling around 9 percent after the company cut its profit forecasts for this year and next, citing continued weakness in oil and gas markets plus lower demand for some of its aero-engine programmes.
The Trent 700 engine was gradually being replaced by the newer Trent 7000 engine, a move which East said was having more of an impact on profits than expected.
The company now expects group underlying profit before tax between £1.33bn (€1.86bn, $2.07bn) and £1.48m, compared to the previous guidance in the range of £1.4bn to £1.55bn.
Free cash flow for 2015 is now expected to be between negative £150m and £150m, compared to previous guidance of between £50m and £350m.
In Marine, profit projections for both 2015 and 2016 were trimmed by £85 million due to offshore market weakness. Its marine division, which makes engines for merchant vessels as well as systems for oil rigs, is expected to turn in underlying profit between break even and £40m.
Civil aerospace earnings also have been hit by softness in business-jet sales in some markets and lower-than-anticipated demand for parts for regional airliners, the London-based company said.
Warren East, Chief Executive, said:”I have joined Rolls-Royce because I recognise the fundamental strength of the business and the scale of the opportunities available to it. This is a company with exceptional technology and outstanding long-term prospects”. The company said it is reviewing further cost reduction and restructuring activities in Marine to improve performance.
‘In addition, our Marine business needs to overcome its offshore market headwinds and rebuild a consistent trend of improving revenues and margins.’.
Advertisement
Rolls-Royce indicated it would report a £390m and £430m half year pre-tax profit when it provides interim results later in July.
