Rolls-Royce May Cut Dividend as Earnings Outlook Weakens

By Robert Wall

LONDON-- Rolls-Royce Holdings PLC on Thursday said it may cut its dividend and warned that its earnings outlook for this year and next had weakened.

The company said that earnings this year would be at the low end of its guidance and that profit next year would be GBP650 million ($988.8 million) lower than it expected, without stating its projection.

The maker of aircraft engines for Boeing Co. 787 Dreamliners and Airbus Group SE A380 superjumbos said full-year underlying pretax profit, a measure that excludes some costs, is now expected to be at the low end of its GBP1.33 billion and GBP1.48 billion range.

"The outlook for 2016 is very challenging. The speed and magnitude of change in some of our markets, which have historically performed well, has been significant and shows how sensitive parts of our business are to market conditions in the short-term," Chief Executive Warren East said.

It is the second profit warning for Mr. East, who issued his first only two days into taking the top job in July. The latest was widely expected as Mr. East reset investor expectations. The company has been struggling with costs in its aerospace business and a weaker market for its marine engine business amid lower oil prices.

Rolls-Royce said it would review its dividend plans and announce any changes "in due course." The company in July also scrapped a GBP1 billion share-buyback program about halfway through.

Write to Robert Wall at robert.wall@wsj.com

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(END) Dow Jones Newswires

November 12, 2015 02:38 ET (07:38 GMT)

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