Rolls Royce hit by defence spending cuts

Rolls-Royce has said revenues and profits will fail to grow this year as it counts the cost of defence spending cuts among major customers.

The guidance from the Derby and Bristol-based engines giant sent shares more than 11 per cent lower, even though boss John Rishton forecast that growth will return next year.

He said: “In 2014, we expect a pause in our revenue and profit growth, reflecting offsetting trends across the business. This is a pause, not a change in direction, and growth will resume in 2015.”

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The company predicts a decline of between 15 per cent and 20 per cent in revenues from its defence aerospace business as well as lower revenues from its Marine division. This will be offset by modest growth in civil aerospace, which expanded its order book by 22 per cent to £60.3bn last year.

Full-year results today showed that underlying profits for the group rose by 23 per cent to £1.76bn in 2013, while its order book was 19 per cent higher at £71.6bn.

Mr Rishton added: “2013 was a year of progress, in which our order book, underlying revenue and underlying profit all grew.”