Rolls Royce Warns of Lower Profit at Marine Unit on Production Problems
Profit And Sales At Unit Will Be Down 10% This Year, Company Says
Rolls-Royce Holdings PLC Thursday cut the outlook for its marine unit due to production problems that will lead to a one-time charge of about £30 million pounds ($50.5 million) and hit profitability.
Marine profit and sales this year will be down 10%, the London-based company said in a statement. Rolls-Royce had previously said profit in the sector would see modest growth on a reduction in revenue.
Rolls-Royce didn't provide further details on the "product quality issue" that triggered the adjustment.
The company also said currency effects from the strong U.K. pound will represent a £40 million hit on profit and £300 million on sales at current exchange rates. The impact comes from repatriating sales in other currencies to the U.K.
At group level the company maintained its outlook for no growth this year with cash-flow on a par with 2013 levels. Growth should resume next year, the company said.
Rolls-Royce said April 29 it was in talks with Siemens AG over the sale of its commercial energy production assets. Talks that involve the gas turbine and compressor activities haven't concluded, it said.
The British manufacturer also this month agreed to pay €2.43 billion ($3.36 billion) to Daimler AG for the German car maker's remaining 50% stake in diesel engine maker Tognum AG, now called Rolls-Royce Power Systems. The transaction should close in the next five months pending regulatory approval.