28th Jun 2016 08:20
LONDON (Alliance News) - Engineer Rolls-Royce Holdings PLC on Tuesday confirmed its outlook for 2016 and said the UK's decision to leave the European Union will not have an impact on its day-to-day operations in the short term.
The FTSE 100-listed engine maker confirmed its previous guidance that its performance in 2016 will be significantly weighted to the second half, with first-half underlying pretax profit expected to be close to breakeven. This reflects the previously-identified headwinds and resulting lower level of overall performance compared to the prior year, Rolls-Royce said.
Underlying pretax profit in the first half of 2015 was GBP439 million.
The outlook for the second half of 2016, the group said, reflects an increase in large engine deliveries, underlying growth in aftermarket revenue and expected benefits from ongoing restructuring programmes within the business.
Rolls-Royce noted that the full-year outlook excludes the year-on-year effect of foreign exchange translation, and that should rates for the full year remain at the average levels seen in the first five months of 2016 - the pound at USD1.44 and EUR1.29 - this would improve underlying revenue by around GBP400 million and underlying pretax profit by around GBP40 million.
Underlying revenue in 2015 was GBP13.4 billion and underlying pretax profit was GBP1.43 billion.
Rolls-Royce said good progress has been made on its transformation programme, a push to cut costs and reduce complexity in decision-making within the business, and updates on this will be provided at its interim results on July 28.
Rolls-Royce added the decision by UK voters to leave the EU "is not the outcome the company would have chosen", but said it will have no immediate impact on its business, and it is committed to remaining in the UK. However, its medium and long-term outlook will be dependent on the relationships the UK establishes with the EU and the rest of the world in the coming years.
Shares in Rolls-Royce were trading up 2.3% at 667.00 pence on Tuesday morning, amid a rising market.
By Sam Unsted; [email protected]; @SamUAtAlliance and Karolina Kaminska; [email protected] @KarolinaAllNews
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