Rolls-Royce to reveal £2bn loss after sterling tumbles post-Brexit vote

Jessica Morris
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A visitor looking at a Rolls Royce Trent
Rolls-Royce is trying to recover from five profit warnings in less than two years (Source: Getty)

The turmoil wrought by Brexit on currency markets is likely to translate into a large paper loss for Rolls-Royce.

The engineering group's half-year results due out on Thursday are expected to show a statutory loss of about £2bn, due to the pound's plunge after the UK voted to leave its biggest trading partner.

This is because the FTSE 100-listed firm runs a $29bn hedging book to protect its dollar-denominated sales from exchange rate movements.

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Accounting rules mean that the book racked up a loss since its last valuation. It was benchmarked on 30 June when the pound was $1.33, compared to $1.48 at the end of December.

City analysts also expect the firm to report an underlying pre-tax loss of about £16m, down from a £439m profit last year — and this figure is without currency markets.

It's partly due to civil aerospace and marine divisions, which are expected to post underlying pre-tax losses of £71m and £57m respectively.

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The engine-maker's investors were rattled in May after it suggested first-half results would only be "close to break-even".

Rolls-Royce is trying to recover from five profit warnings in less than two years under chief executive Warren East.

He's since unveiled a turnaround programme which halved Rolls-Royce dividend and led to a raft of job cuts from the company's senior management team.

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