Rolls-Royce's shares spike over seven per cent as company says 2016 profit will trump expectations

 
Rebecca Smith
The firm hopes to finalise the agreement today
The firm hopes to finalise the agreement today (Source: Getty)

Shares in Rolls-Royce rose as much as 7.7 per cent to 716.7p this morning, after the firm settled bribery claims on three continents and said its profit for 2016 will beat expectations.

The engineering giant announced yesterday it had reached, in principle, a £671m deal with regulators to settle allegations of bribery and corruption.

The investigations related to claims of possible bribery and corruption in the firm's overseas markets; China and Indonesia in particular.

Read more: Rolls-Royce to pay £671m to settle corruption probes

Rolls-Royce said it will continue to fully cooperate with authorities and will pay out £293m for the first year of the three agreements. The UK share of the settlement will go before a judge for approval today.

It said in a statement, it expected "profit and, in particular, cash" to be ahead of expectations for 2016, after a solid finish to the year. Rolls-Royce will report its full-year results on 14 February.

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If so, it will mark a boost for the company, which had issued five profit warnings over the past two years and announced underlying pre-tax profit fell 76 per cent to £104m for the first half of 2016.

Chief executive Warren East has been focused on turning around the firm's fortunes, and said in July, the business "remains well positioned to deliver a solid second half performance supported by growth in engine deliveries, stronger aftermarket revenues and incremental benefits from our ongoing restructuring programmes".

Earlier this month, Rolls-Royce announced it had teamed up with a raft of British engineering groups to develop a fleet of mini nuclear reactors.

It will work with Amec Foster Wheeler, Nuvia and Arup in a partnership to build entire running power plants "capable of powering a city the size of Leeds from the ground up", the company said.

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