Shares in Rolls-Royce are down 8 per cent following the company's profit warning, in an unscheduled update on its guidance in which it also announced it has suspended its £1bn share buyback programme.
The UK engineering group has lowered profit expectations for its marine division by £85m for both 2015 and 2016, as offshore markets continue to weaken. It also warned its civil aerospace unit will face “net headwinds” of around £300m because of a shift from its Trent 700 engine to the Trent 7000.
With underlying profit before tax now expected to be between £1.325bn and £1.475bn in 2015, down from £1.4bn-£1.55bn, the group has decided to suspend its share buyback programme.
Given the weaker near-term cash outlook, we will discontinue the current share buyback programme, having completed £500m of the planned £1bn programme in the first half of the year.
Following the profit warning, share prices dipped by 8 per cent to 779.
The company will be releasing its first half results on 30 July.