Rolls-Royce issues updated guidance - hit by decline in marine and other sectorsNews // July 6, 2015
Rolls-Royce has issued updated 2015 guidance, including a preview of our expected half-year results, and at the same time has identified a number of market developments in 2015 that are now expected to have a more significant impact in 2016. These primarily relate to civil aerospace markets, particularly for Trent 700 engines during their transition to the new Trent 7000, business and regional jets, and in the offshore markets for the company's marine business.
In a statement about 2015-2016, Rolls-Royce said: "Offshore markets continue to weaken, reducing our marine profit by around £85 million in both years.
"Notwithstanding these expected headwinds we continue to believe that the group can achieve significant improvements to returns and cash flow, albeit later than previously indicated."
"Overall, performance for 2015 for the bulk of our business is expected to be broadly in line with previous guidance. However, further deterioration in the offshore market is now expected to impact full year profit for marine."
Guidance for 2015 revenue is unchanged for the full year. Group underlying profit before tax is now expected to be between £1,325 million to £1,475 million, compared to previous guidance of £1,400 million to £1,550 million, reflecting the deterioration in offshore.
"We now expect our marine underlying profit to be between break even and £40 million, compared to previous guidance of £90-120 million," said Rolls-Royce. "We are reviewing further cost reduction and restructuring activities in marine to improve performance which, including asset impairments, is expected to result in an exceptional charge of £70-100 million which will be recognised outside underlying profit."
Warren East, Chief Executive, said: "Our Marine business needs to overcome its offshore market headwinds and rebuild a consistent trend of improving revenues and margins. Our immediate priority is to find the performance improvements needed to deliver these goals and ensure that this world-class business continues to meet the needs of its customers and shareholders alike.”