Rolls-Royce share price dives following profit warning

Guy Bentley
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Rolls-Royce sees tough times ahead (Source: Getty)

Rolls-Royce Holdings share price fell this morning after warning that its underlying revenue may be 3.5 to four per cent lower in 2014 compared to last year, on the back of worsening economic conditions and tightening Russian trade sanctions.

The British engine maker said leading customers had cancelled orders particularly in the Nuclear & Energy and Power Systems businesses.

The FTSE 100 company also said it was unlikely it would start returning to growth next year.

However, Rolls-Royce does not believe the decline in sales will alter its profit forecast, excluding detrimental foreign exchange movements, which could reach £60m, down £10m from previous estimates.

The world's second-largest aircraft engine maker expects underlying profit in its civil aerospace division to be higher than previously thought.

Chief executive John Rishton said:

While the short term is clearly challenging, reflecting the economic environment, the prospects for the group remain strong, driven by the growing global requirement for cleaner, better power. The operational efficiencies already achieved and the cost programmes we will now accelerate will put us in a better position to benefit from these growth drivers.

Rolls-Royce's share price has taken a beating following the announcement, falling 8.5 per cent.

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