Rolls-Royce says profits hit by currency headwinds and marine charge

1st May 2014 07:55

Rolls-Royce confirmed full-year revenues and profits are likely to be hit by foreign exchange headwinds with underlying results flat, and is confident growth will return in 2015. The FTSE 100 engine maker said underlying first-half figures will exclude adverse foreign exchange translation effects, estimated at £40m on profit and £300m on revenue at current exchange rates, with free cash flow similar to 2013.Financial performance in the calendar year 2014 is expected to be weighted to the second half of the year, with around two thirds of the full-year profit being generated in the second half. This phasing reflects the first half containing higher restructuring and a £30m one-off charge in Marine to rectify a product quality issue, while the second half sees phasing of cost reduction improvements and trading. As a result, Rolls-Royce said free cash flow during the first half is expected to be between £200m and £400m lower than during the first half of 2013.At a business level, management maintained guidance except in Marine, where it now expects a reduction of around 10% in profit and revenue compared to 2013, caused by the one-off charge and lower services volume. The group also notified that legacy accounting issues had been tidied up, as discussions with the Financial Reporting Council have found it does not expect any further adjustments or restatements to be required regarding accounting for the sale of new equipment and services TotalCare agreements in its Civil Aerospace business. Shares in Rolls-Royce were down 0.1% to 1,048p at 08:05 on Wednesday.OH