Underlying profits fell to £813 million, down from £1.4bn the year before (a fall of 49%), although this is better than many had predicted. The company also saw a 9% increase in its reported revenue once one-off costs have been stripped out.
In January, Rolls-Royce agreed to a payment of £671mn to settle 12 counts of corruption with authorities in the UK and America, following accusations that the company did not do enough to combat bribery in seven countries, including Thailand, Russia and China. The company has also written off £4.4bn from currency-related contracts.
Revenues within Rolls-Royce’s Marine division fell the most, at 24%, something the company said was due to ‘weak offshore markets impacting both OE and service revenues’, although it went on to add that ‘net restructuring benefits from current and legacy programmes [are[ starting to improve performance’.
Warren East, Rolls-Royce chief executive, called 2016 “an important year”, saying they had “accelerated the transformation” of the company.
“Despite the significant market and aerospace product transition challenges identified in 2015, we have made operational progress and performed ahead of our expectations for the year as a whole,” he added. “At the same time we have delivered major changes to our management and processes and, while we have made good progress in our cost-cutting and efficiency programmes, more needs to be done to ensure we drive sustainable margin improvements within the business.”
Mr East concluded by saying that “cultural and behavioural changes” were necessary to ensure that “high standards of business conduct are maintained. These are essential if we are to become a more trusted, resilient company.”
