The strength of the pound and a one-off charge for fixing a product problem will reduce Rolls-Royce's profits by £70m this year.
The engineering giant said sterling's rise against the US dollar and the euro would cost it £300m in reduced revenue and £40m in profit, Rolls said in a trading update.
A £30m payment to put right a problem with product quality and lower services volume will reduce revenue and profit at Rolls's marine business.
Rolls shocked the market in February when it announced that a decade of revenue growth had come to an end and that profits would be flat this year.
The group now expects profits to fall because of the pound's strength and problems at the marine business, which it had predicted would show modest profit growth. The company declined to say more about the product quality glitch at its marine arm.
"At a business level, we maintain guidance except in marine, where we now expect a reduction of around 10% in profit and revenue compared to 2013, caused by the one-off charge and lower services volume," it said.
Rolls, which holds its annual general meeting on Thursday, said revenue and profit would now be weighted towards the second half of the year. As a result, first-half free cashflow will be between £200m and £400m lower than in the first half of 2013.
The world's second-biggest aircraft engine maker stuck to its guidance that growth would pick up again next year.
Rolls said it had agreed to make changes to its accounting policies and description of its business after the Financial Reporting Council questioned how the group reports contracts to service its engines.
Rolls said it did not expect the watchdog to require further restatements of the contracts.
Rolls said it was still in talks with Siemens to sell its energy gas turbine and compressor business to the German company. It announced discussions on the deal, reportedly worth about £800m, on Tuesday.
theguardian.com
The engineering giant said sterling's rise against the US dollar and the euro would cost it £300m in reduced revenue and £40m in profit, Rolls said in a trading update.
A £30m payment to put right a problem with product quality and lower services volume will reduce revenue and profit at Rolls's marine business.
Rolls shocked the market in February when it announced that a decade of revenue growth had come to an end and that profits would be flat this year.
The group now expects profits to fall because of the pound's strength and problems at the marine business, which it had predicted would show modest profit growth. The company declined to say more about the product quality glitch at its marine arm.
"At a business level, we maintain guidance except in marine, where we now expect a reduction of around 10% in profit and revenue compared to 2013, caused by the one-off charge and lower services volume," it said.
Rolls, which holds its annual general meeting on Thursday, said revenue and profit would now be weighted towards the second half of the year. As a result, first-half free cashflow will be between £200m and £400m lower than in the first half of 2013.
The world's second-biggest aircraft engine maker stuck to its guidance that growth would pick up again next year.
Rolls said it had agreed to make changes to its accounting policies and description of its business after the Financial Reporting Council questioned how the group reports contracts to service its engines.
Rolls said it did not expect the watchdog to require further restatements of the contracts.
Rolls said it was still in talks with Siemens to sell its energy gas turbine and compressor business to the German company. It announced discussions on the deal, reportedly worth about £800m, on Tuesday.
theguardian.com
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