Rolls-Royce Results to Reflect Currency Swings

LONDON—Rolls-Royce Holdings PLC said currency movements will provide less of a boost to its performance this year than previously forecast though the British engine maker is yet to take into account the slump in the British currency after the U.K.'s decision to leave the European Union.

Rolls-Royce said on Tuesday that currency swings should increase revenue by around £ 400 million ($532 million) and underlying pretax profit by around £ 40 million, before taking into account the extra benefit of the steep fall in the value of sterling since last Friday.

In May, the London-based company predicted currency-related revenue and profit gains of £ 450 million and £ 50 million respectively.

The referendum's outcome "will have no immediate impact on our day-to-day business," the company said.

Rolls-Royce, a supplier of aircraft engines for Boeing Co. and Airbus Group SE planes, had wanted the U.K. to remain in the EU.

"The medium and long term effect will depend upon the relationships that are established between the U.K., the EU and the rest of the world over the coming years," the company said.

The British pound stabilized iin Asia trading on Tuesday, bringing a reprieve for the battered currency after a nearly 12% decline in the wake of the U.K.'s Brexit vote.

Rolls-Royce, which no longer is affiliated with the luxury car maker of the same name, said business in the first few months of the 2016 was in-line with plans, while first-half results would be "close to break-even." The company in May said profit for the full-year would be generated principally in the second half.

Rolls-Royce Chief Executive Warren East, who has been in the job almost a year, has been trying to revamp the company to boost competitiveness, shedding jobs and trying to accelerate cost savings after a succession of profit warnings.

"We are well on track to delivering our expected cost savings in 2016 and 2017," Rolls-Royce said the trading update. The company is slated to report half-year results July 28.

Write to Robert Wall at [e-mail]

(END) Dow Jones Newswires

June 28, 2016 03:35 ET (07:35 GMT)

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