Rolls-Royce’s stock tumbled another 3% within the first hour of trading, after already cratering 9% the previous day, following its third profit warning in just over a year.
The London-listed aerospace and defence giant revealed on July 6 that its profit would be between £1.325 billion ($US2.1 billion) and £1.475 billion ($US2.3 billion) — this is down from the previous guidance of £1.4 billion ($US2.2 billion) and £1.55 billion ($US2.4 billion).
In the statement, Rolls-Royce said it “a number of market developments in 2015 that are now expected to have a more significant impact in 2016. These primarily relate to Civil Aerospace markets, particularly for our Trent 700 engines during their transition to the new Trent 7000, business and regional jets, and in the offshore markets for our Marine business.”
Newly appointed CEO Warren East added in the company’s statement:
… I am clearly disappointed by today’s [July 6] announcement and the impact this will have on our investors and employees. 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.
“In the near term we have to manage the important transition from the Trent 700 to the new Trent 7000 and build our capacity to service the Trent 1000 and XWB programmes. In addition, our Marine business needs to overcome its offshore market headwinds and rebuild a consistent trend of improving revenues and margins. Our immediate priority is to find the performance improvements needed to deliver these goals and ensure that this world-class business continues to meet the needs of its customers and shareholders alike.