Rolls-Royce halves its dividend to shore up finances, the first cut for 24 years, after annual profit fell 16 percent. As Hayley Platt reports, the company's warning of continued tough trading in its civil aerospace and marine engine businesses.
It's preparing for stiff headwinds ahead. Rolls Royce has cut its final dividend by half to shore up its finances. It's the first cut in 24 years, prompted by a 16 percent fall in annual profits. The combination of a slowdown in Asia and falling oil prices are its main worries. Customers of its marine business have cancelled orders for power systems. And revenues of its lucrative servicing business have dropped. BGC's Mike Ingram. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "They're being squeezed from every conceivable angle at the moment. I suppose the only relief that Rolls-Royce is perhaps having at the moment is that the recent slump in sterling might help their export competitiveness somewhat, though of course that's going to take some time before that feeds through into a better operating performance." Rolls Royce boss, Warren East is aiming to save 150-200 million pounds a year. He wants to simplify and improve decision making. And that means more management jobs could go. That's on top of a 20 percent reduction in the top two layers already made. Analyst expect pretax profits for 2016 to halve to 673 million pounds. But the company is sticking to its 2016 earnings guidance. Investors seem to approve the news - shares were 18 percent higher in mid morning trading.