Rolls-Royce reiterates recently-downgraded guidance

13th Nov 2014 07:18

Engine maker Rolls-Royce has reiterated that its recently-downgraded guidance for growth remains unchanged, following the announcement last week that it would be cutting 2,600 jobs and accelerating its cost-cutting programme.The engineering group announced on 4 November that it would be incurring restructuring costs of £120m over the next two years."Excluding these charges, our guidance is unchanged for 2014, 2015 and the medium-term outlook, as outlined on 17 October," the company said in a statement on Thursday.Last month, the firm predicted that underlying sales in 2014 would fall 3.5-4% from the £15.5bn generated last year on the back of worsening trading conditions. Earlier in the year, it had guided to underlying revenues being flat year-on-year, excluding a £500m impact from adverse currency-exchange movements.It also warned that growth might not return in 2015, as previously expected, with underlying revenue guidance for next year now at +/-3%.The group explained that economic conditions have "deteriorated" in the last few months and Russian trade sanctions have tightened, "leading a number of customers to delay or cancel orders particularly in our nuclear & energy and power systems businesses".Forecasts for 2014 free cash flow (FCF) were also more than halved to £350m due to the decline in revenue, lower deposits in energy and marine, and slower progress on inventory than planned. The firm had previous guided to flat FCF on 2013 (£780m).