Rolls-Royce shares slide over dividend fears

The embattled engine-maker has seen its share price fall more than 3 per cent, as reports speculate it could chop a quarter off 2014’s payout of 23.1p a share.

The company - which has been dogged by profit warnings - will reveal the full extent of the cut on Friday when it lays bare its full-year results for 2015.

The City expects the firm to report an annual underlying pre-tax profit that has slumped by 16.5 per cent to £1.35bn compared to a year ago, after it was hit by defence spending cuts and falling crude prices that have impacted its Marine division, which supplies the oil industry.

In December chief executive Warren East, who joined the firm last July, said he would scrap the current aerospace and land and sea divisional structure.

Rolls-Royce said the move will cut out a layer of senior management, with the group instead comprising five businesses from January - civil aerospace, defence aerospace, marine, nuclear and power systems.

Rolls-Royce said the revamp will “simplify the organisation, drive operational excellence and reduce cost”.

The shake-up comes amid a major revival plan to boost performance and slash costs by between £150 million and £200 million a year.

FTSE 100-listed Rolls-Royce, which has factories in Bristol, Derby and Rotherham, issued its fifth profit warning in two years in November, as it also saw lower orders in the corporate jet market due to slowdowns in China, Brazil and the Middle East.

It is cutting management roles and has previously announced 3,600 redundancies.

Analysts at Societe Generale said “most of the group’s businesses face major earnings and cashflow headwinds in the medium term, and any recovery will be very gradual”.

Mr East is under pressure to revive the group’s fortunes after the profit warnings hammered its share price - down more than 40 per cent over the last 12 months.

US activist shareholder ValueAct, which has doubled its stake in the firm to around 10 per cent, is pressing for change, and has asked for a seat on the board.