Thursday February 7, 08:31 PM
Weak dollar rocks Rolls-Royce profit
LONDON (AFP) - Rolls-Royce, the British maker of plane engines, said Thursday that a weak dollar caused its 2007 net profit to slump by more than a third to 606 million pounds (809 million euros, 1.184 billion dollars).
But the company also announced that its order book jumped 76 percent to a record 45.9 billion pounds in 2007, thanks to a doubling of engine orders in Asia and the Middle East.
The share price of Rolls-Royce plunged 8.75 percent to 438 pence approaching the close in the wake of the results, while dealers said investors were also disappointed that the group had failed to announce a share-buyback plan.
"Rolls-Royce made strong progress in 2007, delivering underlying sales and profit growth across all its businesses and good cash flow despite the continuing challenges of a weak US dollar and increased unit costs," Rolls-Royce chief executive John Rose said in a statement.
Rolls-Royce announced last month that it would axe up to 2,300 jobs in Britain, Europe and the United States, blaming rising costs and the impact of the weak dollar on earnings.
It said Thursday that group sales rose 3.9 percent to 7.44 billion pounds last year while underlying profit before tax was up 13 percent to 800 million pounds.
The value of its order book for Asia and the Middle East ended 2007 at the same level as its total order book just four years ago.
"Almost 50 percent of our order book is from outside the traditional markets of Europe and North America. In 2007 new orders were secured in a number of countries in which we had previously had little or no presence," it added in the statement.
Rolls-Royce's Trent 900 engines are being used to power the Airbus A380 superjumbo. Singapore Airlines (C6L.SI - news) last year became the first airline to fly the huge passenger jet.
On Thursday, the company said that while it operated "in a competitive and challenging environment," the future appeared positive.
"Our strong focus on productivity and efficiency, our broad product and service portfolio and our access to growing global markets give us confidence that in 2008 the business will continue to deliver profitable growth and positive cash flow," the statement said.
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