Losing power

17 October 2014 By Robert Cole

A profit warning has sent the UK engineer’s shares down 8 pct. Russian sanctions and the weak world economy are hurting. Cost cuts and new medium-term guidance show Rolls is trying to soften the blow. But investors may discount the company’s forecasting powers.

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Aero-engines and turbines maker Rolls-Royce said that profit could fall as much as 3 percent in 2015 in a trading update on Oct. 17. Underlying revenue in the current year was likely to be between 3.5 percent and 4 percent down, against previous guidance of flat.

“In the last few months economic conditions have deteriorated and Russian trade sanctions have tightened, leading a number of customers to delay or cancel orders particularly in our Nuclear & Energy and Power Systems businesses,” Rolls said.

At 1149 BST, the stock was trading 13.5 percent lower at 8.13 pounds.

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