Rolls Royce shares plummet on SFO corruption probe
Rolls Royce shares have taken a hit this morning, currently down almost 15 per cent after the engine manufacturer confirmed that it may face prosecution for alleged corruption in overseas dealings.
What's more, it also saw reported profit before tax plunge 36 per cent – to £1.8bn in 2013 from a year earlier – due in part to its 2012 sale of its stake in IAE, which netted it £699m profit. Last year, profit from disposals was £216m.
Despite seeing growth in its order book of 19 per cent (to £71.6bn), Rolls royce said a 15-20 per cent decline in defence revenue and a weaker marine business means it expects underlying revenues and profit to be flat.
Chief executive John Rishton said the firm expects to see “a pause” in revenue and profit growth, “reflecting offsetting trends across the business”. Growth will resume in 2015, he reassured.
Revenue increased 12 per cent over 2013 as sales in new equipment and services rose. The company’s offshore and naval businesses continued to do well over the year, although its merchant business declined 11 per cent.
Rolls Royce said it's upped its dividend for the year by 13 per cent to 22p.
SFO probe
The UK's Serious Fraud Office (SFO) began an investigation in December into allegations of bribery in China and Indonesia. Things came to a head yesterday after two men, neither of whom work for Rolls Royce, were arrested in London in connection with the claims.
Rolls Royce says it remains too early to predict outcomes from the probe, which could include prosecution of individuals or the company. From the statement:
Accordingly, the potential for fines, penalties or other consequences (including debarment from government contracts, suspension of export privileges and reputational damage) cannot currently be assessed.
Because the investigation's ongoing, the group hasn't put a timescale on reaching a resolution.
