12th Feb 2016 07:16
LONDON (Alliance News) - Rolls-Royce Holdings PLC on Friday left its outlook for 2016 unchanged, as the engine maker cut its dividend and reported a drop in underlying pretax profit.
Underlying pretax profit fell to GBP1.43 billion in 2015, from GBP1.62 billion in 2014, coming in ahead of the GBP1.3 billion expected by analysts, as underlying revenue fell to GBP13.35 billion from GBP13.86 billion.
"Our outlook for 2016 is unchanged. Despite steady market conditions for most of our businesses it will be a challenging year as we start to transition products and sustain investment in Civil Aerospace and tackle weak offshore markets in Marine," Chief Executive Warren East said.
Rolls cut its dividend for the year as a whole to 16.37 pence from 23.10p, slightly ahead of the 16.20p expected by analysts. East said the payment to shareholders will be halved at the next half year. Underlying free cash flow fell to GBP179 million from GBP447 million.
"The pace of investment required to transform the business creates near-term pressure on free cash flow. At the same time, we need to sustain a healthy balance sheet to ensure we have the financial flexibility to maintain a strong investment grade credit rating," East said.
"We recognise the importance of a healthy 'dividend' to our shareholders. Subject to short-term cash needs, we intend to review the payment so that it will be rebuilt over time to an appropriate level," East said.
On a reported basis, pretax profit rose to GBP160.0 million from GBP67.0 million.
By Samuel Agini; [email protected]; @samuelagini
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