13th February 2015
Shares in Rolls Royce have fallen as the aircraft engineer reports the first sales drop in a decade.
The shares opened 3.3% down this morning after full year results from the company that showed a sales drop of 6% to £13.7 billion in 2014, marking the first fall in 10 years.
Revenues were also down 6% to £14.6 billion and pre-tax profits decreased 8% to £1.6 billion, which reported profits dived 96% to £1.7 billion.
The end of year dividend is expected to be 23.1p per share.
Rolls Royce has struggled witha tumbling oil price, a decline in defence spending, and overall economic uncertainty. The strength of the pound against the dollar, the currency in which it makes most of it sales, is believed to have wiped £500 million from its revenues.
While Rolls Royce chief executive John Rishton said the results were in line with earlier guidance, this will do little to steady investors nerves, particularly as the company has also announced 2,600 job losses and restructuring plans.
Investec analyst Rami Myerson was not too perturbed by the 2014 results as they were broadly in line with consensus and his own forecasts. However, he looked further down the road to 2016 and on that basis put his ‘hold’ recommendation and target price of 860p both ‘under review’.
‘The midpoint of full year 2015 revenue and profit guidance is broadly in line with consensus, which should reassure,’ he said. ‘However, following 2014, investors will likely remain cautious. We expect focus to move rapidly to full year 2016 where Rolls Royce will continue to face headwinds in most of its businesses.
‘A continued drag on group performance by Rolls Royce non-aerospace businesses should serve as a catalyst for a strategic review.’