Rolls-Royce warns on 2015 profit due to oil uncertainty, China

[LONDON] British engineer Rolls-Royce warned that profit could come in as much as 14 percent lower this year compared with last year, citing oil price uncertainty and slowing growth in Europe and China.

Rolls-Royce said on Friday it expected pretax profit of 1.4 billion pounds to 1.55 billion pounds (US$2.16-2.39 billion) in 2015, compared with 1.62 billion pounds it reported for last year, which was in line with a consensus forecast.

Shares in Rolls-Royce traded down 3 per cent at 878.3 pence on Friday.

Rolls, the world's second-largest maker of aircraft engines after US group General Electric, had already downgraded 2015 forecasts in October, when it shocked the market by warning there would be no growth this year.

It said then that profit would be at best unchanged from 2014 to 3 per cent lower at worst. The updated guidance means profit is expected to be between 4 to 14 per cent lower. "We've broadened that band because of our growing uncertainty," Chief Executive John Rishton told reporters on a call.

Current analyst expectations for 2015 are for pretax profit of 1.481 billion pounds, in line with the mid-point of the updated range provided by Rolls.

Rolls-Royce blamed the lower oil price and slower economic growth in Europe and China for the uncertainty. It said it was seeing lower demand for the turbine engine-based power systems and associated services which it sells to oil and gas companies, and for the engine equipment used in power generation, construction and mining projects.

REUTERS