Defence spending cuts and commodity price falls weigh on Rolls Royce results

John Rishton, CEO of Rolls Royce
John Rishton, CEO of Rolls Royce
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ENGINES giant Rolls-Royce has reported its first fall in revenues for a decade after it was hit by defence spending cuts and falling commodity prices.

The company, which has a base in South Yorkshire, also warned that this year will be tougher than expected as the recent slide in oil prices has resulted in “increasing uncertainty” for many of its customers.

Rolls reported a six per cent drop in underlying revenues to £14.6bn for 2014 and said underlying profits were eight per cent lower at £1.62bn.

The figures are in line with the company’s recently downgraded forecasts but shares were back under pressure after Rolls lowered its guidance for this year for the second time in four months.

It now expects profits for 2015 to be in the range of £1.4bn to £1.55bn.

The difficult trading conditions have already prompted the company to announce plans for 2,600 job losses, including a significant number in the UK.

Chief executive John Rishton said: “2014 has been a mixed year during which underlying revenue fell for the first time in a decade, reflecting reduced spending by our defence customers, macroeconomic uncertainty, and falling commodity prices.”

The company has also been affected by trade sanctions on Russia, which has led to a number of delayed or cancelled orders, particularly in its nuclear and energy and power systems businesses.

Around 90 people work at the Rolls-Royce Advanced Blade Casting facility in Rotherham. Rolls-Royce also has a handful of staff on secondment at the Nuclear AMRC, which is part of the University of Sheffield.