Rolls-Royce Holdings Sees Earnings Tailwind From Weak Sterling

Robert Wall

LONDON-Rolls-Royce Holdings PLC said Thursday that sterling weakness could provide an earnings tailwind this year.

The British aircraft engine maker, which repatriates profits made in foreign currencies from overseas businesses, has benefited from the slide of the pound since the Brexit vote in June 2016. The currency effect could boost sales by 400 million pounds ($517 million) and pre-tax profit by GBP50 million, the company said in a trading update ahead of its annual shareholder meeting.

The company, which supplies aircraft engines for Boeing Co. and Airbus SE airliners, stuck to its full-year guidance for slightly better sales, and cash flow similar to last year's level. As in 2016, the company expects little profit in the first half of the year, with the bulk generated in the last six months.

Chief Executive Officer Warren East, who has been trying to streamline the company and boost profitability, said progress had been good but "more needs to be done to ensure we drive sustainable margin improvements within the business."

Rolls-Royce settled a long-running corruption probe in January, pleading guilty to wrongdoing in business activity over several decades. Rolls-Royce has agreed to pay more than $800 million in fines, in deals with U.S., British and Brazilian corruption watchdogs.

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

(END) Dow Jones Newswires

May 04, 2017 02:47 ET (06:47 GMT)

Rolls Royce (PK) (USOTC:RYCEY)
Historical Stock Chart
From Aug 2024 to Sep 2024