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| Rolls-Royce releases third profit warning | Rolls-Royce releases third profit warning |
| (about 3 hours later) | |
| Rolls-Royce has issued its third profit warning in just over a year, blaming lower oil prices and weaker demand for some of its aircraft engines. | Rolls-Royce has issued its third profit warning in just over a year, blaming lower oil prices and weaker demand for some of its aircraft engines. |
| Rolls last issued a profit warning in February, claiming the sharp fall in oil prices had "increased uncertainty for many of our markets and customers". | Rolls last issued a profit warning in February, claiming the sharp fall in oil prices had "increased uncertainty for many of our markets and customers". |
| It had previously said its 2015 profit would be between £1.4bn and £1.55bn. | |
| But on Monday, the engineering firm lowered its profit outlook again, this time to between £1.325bn and £1.475bn. | But on Monday, the engineering firm lowered its profit outlook again, this time to between £1.325bn and £1.475bn. |
| Rolls-Royce shares fell nearly 9% to 780p on the profit downgrade. | |
| Analysis: Kamal Ahmed, BBC business editor | |
| Two things are weighing heavily on Rolls Royce - the low oil price and the development of its new jet engine. | |
| Rolls-Royce makes much of its money in its marine division supporting oil exploration - building vessels and rig support equipment. With oil giants pulling back on capital investment, the division has suffered. | |
| It has also been caught out by its development of the new Trent 7000 jet engine - announced in Farnborough last year - which replaces the Trent 700. Orders have fallen for the older model faster than expected as customers wait for the new engine which will come into service in 2017. | |
| "Bloody" was one description of this morning's announcement by a senior figure close to the business. | |
| Warren East, the new chief executive of Rolls Royce, will be given a period of grace while he works out where Rolls-Royce's real growth areas are. But the fall in the share price this morning shows that investors are waiting to be convinced that the company has the right strategy in place. | |
| 'Clearly disappointed' | |
| The engineering and aerospace firm had originally said profit in 2015 would be flat to 3% lower, when it surprised investors in February last year by issuing its first profit warning in a decade. | The engineering and aerospace firm had originally said profit in 2015 would be flat to 3% lower, when it surprised investors in February last year by issuing its first profit warning in a decade. |
| In the end, underlying pre-tax profits in 2014 fell 8% to £1.62bn, roughly in line with expectations. | In the end, underlying pre-tax profits in 2014 fell 8% to £1.62bn, roughly in line with expectations. |
| Rolls also said it would halt its £1bn share buyback - of which it had completed £500m - as a result of falling profits. | Rolls also said it would halt its £1bn share buyback - of which it had completed £500m - as a result of falling profits. |
| Rolls-Royce said lower demand and pricing for its Trent 700 engines and reduced demand for its business jet engines would hit profits by £300m. | Rolls-Royce said lower demand and pricing for its Trent 700 engines and reduced demand for its business jet engines would hit profits by £300m. |
| "I am clearly disappointed by today's announcement and the impact this will have on our investors and employees," said Rolls-Royce chief executive Warren East. | "I am clearly disappointed by today's announcement and the impact this will have on our investors and employees," said Rolls-Royce chief executive Warren East. |
| "Notwithstanding the market developments, it is our responsibility to build a business that is sustainable and resilient, no matter what is thrown at us, and this will be my fundamental priority for the next few years." | "Notwithstanding the market developments, it is our responsibility to build a business that is sustainable and resilient, no matter what is thrown at us, and this will be my fundamental priority for the next few years." |
| Mr East joined Rolls-Royce as chief executive earlier this year from microchip manufacturer Arm Holdings, replacing John Rishton, who announced his retirement after a difficult four years in charge of the 131-year-old company. | Mr East joined Rolls-Royce as chief executive earlier this year from microchip manufacturer Arm Holdings, replacing John Rishton, who announced his retirement after a difficult four years in charge of the 131-year-old company. |