Engine maker Rolls-Royce reports record 拢4.6bn annual loss
The fall in the pound and a 拢671m settlement over corruption and bribery claims have taken their toll on the group's bottom line.
Tuesday 14 February 2017 17:14, UK
Engine maker Rolls-Royce has reported a record annual loss of 拢4.6bn for 2016.
The loss was largely down to accounting charges linked to the slump in the pound, which affected the value of financial hedging products at the FTSE 100 giant.
But the figure also marks a difficult period in which it has had to with US, UK and Brazilian authorities - with fines totalling £671m.
On an underlying basis, profits fell 49% to £813m, though this was better than expected. Shares were 4% lower on market close.
The Derby-based group, which employs about half of its 50,000-strong workforce in the UK, has been axing thousands of jobs over the last couple of years as part of a cost-cutting overhaul.
Chief executive Warren East said: "2016 has been an important year as we accelerated the transformation of Rolls-Royce."
He said progress had been made in the group's operations and efficiency programmes but added that "more needs to be done to ensure we drive sustainable margin improvements within the business".
Mr East said: "2017 remains a challenging year and we have lots of operational improvements to do.
"We have to look after the short term or there won't be a long term."
It has had a tough past few years with a string of profit warnings together with the corruption settlement which included a record £497m penalty from the UK's Serious Fraud Office.
The huge loss for 2016 compares to a profit of £160m, and includes a £4.4bn write-down on financial instruments known as derivatives - used by big companies to try to insure against currency volatility.