LONDON, February 13 – Aircraft engine maker Rolls Royce warned on Thursday that it would experience a “pause” in profits and revenue growth this year, sending its share price plunging.
The group said in a results statement that its performance was expected to be hit by the combined impact of military budget cuts and the completion of some major export programmes.
“In 2014, we expect a pause in our revenue and profit growth, reflecting offsetting trends across the business,” said chief executive John Rishton, as the company also posted tumbling 2013 net profits.
“This is a pause, not a change in direction, and growth will resume in 2015.”
“Cash flow is expected to be broadly similar to 2013. Our record order book underpins our confidence in the long-term growth of our business.”
Thursday’s grim news sent Rolls-Royce shares diving 11.49 percent to 1,071 pence in morning deals on London’s FTSE 100 index of top shares, which was down 0.46 percent at 6,644.46 points.
Rolls-Royce also revealed that net profits slumped 41 percent last year.
Profit after taxation dived to £1.37 billion ($2.27 billion, 1.65 billion euros) in 2013, compared with £2.32 billion in the previous year, but the fall also reflected an accounting gain booked in the group’s 2012 accounts.
Underlying profit excluding exceptional items jumped 23 percent to £1.76 billion, as revenues grew 27 percent to £15.5 billion.