Rolls-Royce’s troubled year has take a further turn for the worse after it warned that unfavourable currency movements will adversely affect 2015 revenues.
The British engineering group, which is in the process of cutting thousands of jobs following profit downgrades and order cancellations, said on Friday that foreign exchange swings could wipe £350m off full-year revenues.
It added, however, that profits should not be affected and maintained its guidance in a first-quarter trading update.
“Compared with 2014, average rates for Sterling have weakened against the US dollar but strengthened against the euro and the Norwegian kroner.
“If rates remain at the average levels seen so far in 2015, these movements would be broadly offsetting for earnings. However, for revenue, we would expect a roughly £350m reduction from translation.”
Rolls-Royce said it expected to perform better in the second half of the financial year, when its aerospace division will deliver its Trent XWB engines at an accelerated rate.
But it warned that trading in its land and sea business was still being affected by lower oil prices and had started more slowly than 2014. That business include the production of engines and other machinery for ships and the rail industry, as well as equipment for the offshore oil and gas industry.
In November, Rolls-Royce said it would cut about 2,600 jobs, mainly in its aerospace division which provides engines for clients including Airbus and Boeing.
The FTSE 100 company said on Friday that it was pressing ahead with the cuts, confirming that about 1,300 people had left the company so far as part of the process.
“We are also driving further cost reduction programmes in our land and sea division,” it added.
The company employs more than 54,000 people in more than 50 countries.
Last month, Rolls-Royce surprised investors by announcing that John Rishton, would retire from the company in July after four years as chief executive.
He will be replaced by Warren East, who was chief executive of the technology company ARM Holdings between 2001 and 2013. East has been a non-executive director of Rolls-Royce since January 2014 and will receive a base salary of £925,000 in his new role.
In the first half of the year, Rolls-Royce announced its largest-ever aerospace order, with Emirates airline selecting its Trent 900 engines to power 50 Airbus A380 aircraft.
