Rolls-Royce jumps on profit upgrade and bribery settlement
Reuters
Published Jan 17, 2017 03:11AM ET
Rolls-Royce jumps on profit upgrade and bribery settlement
LONDON (Reuters) - Shares in Rolls-Royce (L:RR) climbed 5 percent on Tuesday after the British aero-engine maker settled a long-running bribery probe and said that 2016 profit would beat expectations.
The news of the profit upgrade came as a boost to the firm after an eighteen month period of cost-cutting and restructuring led by CEO Warren East, who was brought in to stabilize the company in mid-2015 after a series of profit warnings.
Analysts said that Rolls's settlement of the bribery investigation with British, U.S. and Brazilian authorities also helped to remove a cloud hanging over the company since 2013, even though the penalty was bigger than expected.
It will pay 671 million pounds to settle the investigations.
Shares in Rolls jumped by 4.7 percent in early trading.
Jefferies analyst Sandy Morris said that the impact of the charge taken to settle the bribery claims was mitigated by the authorities agreeing to spread the payment over five years, meaning the financial impact on the company was "negative but benign".
"This is by no means a great moment in Rolls-Royce's history but in terms of a healing process, getting the SFO settled and having trading particularly on cash flow improving, well maybe, just maybe, Rolls is on the mend," he said.
Rolls said in its statement late on Monday that it had finished the year strongly meaning that profit and cash flow would be ahead of expectations.
Analyst forecasts had been for Rolls's 2016 pretax profit to come in at 686 million pounds, half what it made in the previous year.
Rolls said the deals agreed with the three authorities would involve the group paying about 293 million pounds in the first year.
The company is due to seek final judicial approval for its agreement with Britain's Serious Fraud Office later on Tuesday.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.