30th Jul 2015 07:01
LONDON (Alliance News) - Aerospace and engineering group Rolls-Royce Holdings PLC posted a sharp fall in first half profit on Thursday, hit by weakness in its offshore marine markets due to the slowdown in the oil and gas industry, as revenue increased and the group edged up its dividend payout.
FTSE 100-listed Rolls-Royce said its pretax profit in the six months to the end of June fell to GBP310 million, down 57% from the GBP713 million it posted a year earlier. Revenue rose to GBP6.37 billion from GBP6.25 billion, but profitability is taking a heavy hit from the slowdown in the oil and gas industry, which has hit revenue in Rolls-Royce's offshore marine business, and by a margin squeeze related to the transition to new jet engine programmes.
Rolls-Royce said its order book at the end of the first half was GBP76.5 billion, up GBP2.8 billion from the start of the year, but said its return on sales fell to 7.3%, down 3.2 percentage points due to an adverse revenue mix and a higher research and development charge.
The company said it will pay a 9.27 pence interim dividend, up 3% from a year earlier.
"In the near term, we are managing a significant transition from mature engines to newer, more fuel efficient ones, such as the Trent XWB, Trent 7000 and Trent 1000. At the same time, we are taking appropriate actions to mitigate the effects of weakness in our offshore marine markets," said Warren East, Rolls-Royce's chief executive.
"While these create a profit headwind in the near term, it is critical we successfully deliver our product launches, complete our supply chain transformation and sustain investment in our businesses to strengthen their competitive positions. The initial phase of my ongoing operational review has and will continue to concentrate on how we drive improvements and sharpen our focus to make us a more resilient and sustainable business," East added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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