Rolls-Royce reports loss of 1.34 bln pounds
Rolls Royce, the British maker of plane engines, said it made a net loss of 1.34 billion pounds in 2008 which it blamed on the weak pound.autos Updated: Feb 12, 2009 15:21 IST
Rolls Royce, the British maker of plane engines, said on Thursday it made a net loss of 1.34 billion pounds (1.49 billion euros, 1.93 billion dollars) in 2008 which it blamed on the weak pound.
"The pace and extent of currency movements have had a significant effect on the group's financial reporting in 2008, with the sterling exchange rates against the dollar and the euro having the biggest impact," Rolls said in a statement.
Rolls had hedged, or taken a defensive position on futures markets, against the pound being stronger than it was.
The group's underlying performance which strips out the impact of currency fluctuations and one-off items was far rosier and the group said it was well positioned to weather the economic downturn.
Full-year underlying pre-tax profit increased by 10 per cent to 880 million pounds.
"We have delivered a good set of results, with strong order intake, cash flow and underlying profit growth achieved in challenging conditions," Rolls' chief executive John Rose said in the earnings statement.
"2009 will be a very difficult year for the global economy. Our well diversified portfolio, the scale of our installed base and the strength of our balance sheet give us confidence that Rolls Royce will respond successfully to current challenges and develop the business for the longer term," he added.
Rolls, which is cutting up to 2,000 jobs this year after slashing 2,300 posts in 2008, saw its share price fall 0.40 per cent to 314.25 pence in early London trade on the FTSE 100 index, which was down 1.73 per cent at 4,160.87 points.
The company added that its order book increased by 21 per cent to a record 55.5 billion pounds in 2008. Group sales meanwhile rose 22 percent to 9.08 billion pounds. Rolls is providing engines for Airbus' future long haul A350 plane.
"Rolls-Royce will not be immune from this deterioration in the global economy but the board believes that the group will be resilient in these challenging conditions, and approaches the current uncertainty from a position of much greater strength than in previous recessions," the group said.
"Falling global growth rates, coupled with shortages of customer finance, are expected to cause a softening in some of the group's markets, in particular in the narrowbody (plane) and corporate and regional sectors where there is already evidence of reducing demand.
"Credit shortages may also create difficulties for some of the group's suppliers," it added.