Rolls-Royce post record profit loss as one-off costs impact full year results

Troubled aerospace company Rolls-Royce (LON:RR) saw profits dive nearly 50 percent over the past year, with a hefty bribery fine and negative currency movements having a larger-than-expected impact on results.

The company posted a record loss of £4.6 billion on Tuesday as 2016 profit fell by 49 percent to £813 million on an underlying basis. Reported revenue rose 9 percent, but underlying revenue fell 2 percent at constant exchange rates.

The final payment to shareholders was maintained at 7.1 pence per share, in line with expectations given in February 2015 giving a full year dividend of 11.7 pence.

The impact of one-off costs, including the £671 million to settle corruption cases with UK and US authorities announced last month, meant results were worse than expected. However, once one-off costs and negative currency movements were stripped away, Rolls-Royce performed better than expected, giving investors hope.

Warren East, Chief Executive, said that despite the “challenges” identified in 2015, the group “made operational progress and performed ahead of expectations for the year as a whole.”

He did add, however, that “more needs to be done”.

Looking forward, East said: “In Civil Aerospace, we need to introduce our new Trent engines and successfully deliver the ramp up in engine production. At the same time we must ensure our wide ranging business transformation programme delivers the full benefits expected, not only in terms of cost savings but also the cultural and behavioural changes necessary to ensure the transformation is sustained and high standards of business conduct are maintained. These are essential if we are to become a more trusted, resilient company.”

The group has issued several profit warnings over the past few years, with shares plummeting further in the wake of Brexit. Shares in the company fell on the report today, and are currently down 4.19 percent at 709.00 (0928GMT).