Rolls-Royce share price down as outlook downgraded to negative by Standard & Poor's

Hayley Kirton
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Tiefensee Visits Rolls-Royce Aircraft Engine Plant
S&P lowered its profit expectations for the manufacturer for 2016 (Source: Getty)

Standard & Poor's (S&P) today downgraded its outlook rating for Rolls-Royce from stable to negative.

The ratings agency, which has dropped its expectations over the manufacturer's profits and cash flow generation for 2016, pinpointed near-term business challenges, particularly in the company's civil aerospace and marine divisions, as the reasoning behind the downgrade.

S&P, which affirmed its A/A-1 long- and short-term corporate credit ratings in the same note, said the change to the outlook reflected that it may possibly lower Rolls-Royce's rating by one notch within the next year and commented that it expected profits to remain weak into 2017.

Read more: Rolls-Royce unveils senior team shake-up

Share price for the company fell throughout the course of the day. Shares were trading down 0.8 per cent at 539.5p shortly before 3pm.

City A.M. approached Rolls-Royce for comment but is yet to receive a response.

In Rolls-Royce's half year results for 2015, the company revealed underlying revenue for the group had fallen three per cent to £6.3bn while underlying profit before tax had tumbled 32 per cent to £439m.

Read more: Could Rolls-Royce be state-owned again?

Rolls-Royce is due to make a preliminary announcement regarding its full year results in February.

Late last year, the manufacturer revealed a number of plans for restructuring, including plans for a new senior management structure, in a move to cut costs and help deliver long-term growth. The announcement came in December, after the company had released a string of profit warnings.

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