Rolls-Royce posts FY loss, looks to margin improvement

Rolls-Royce has posted a FY pretax loss of £4.64bn, from a year-earlier restated profit of £160m, and said more needed to be done to drive sustainable margin improvements.

The reported loss reflected a non-cash impact of £4.4bn period-end mark-to-market revaluation of its derivatives, and a £0.7bn charge for financial penalties from agreements with investigating bodies.

The outfit maintained its final dividend payment of 7.1p a share, giving a FY dividend of 11.7p, from 16.4p.

CEO Warren East said 2016 was an important year for the company as it accelerated its transformation.

"Despite the significant market and aerospace product transition challenges identified in 2015, we have made operational progress and performed ahead of our expectations for the year as a whole," said East.

He added that Rolls had delivered major changes to its management and processes.

"While we have made good progress in our cost cutting and efficiency programmes, more needs to be done to ensure we drive sustainable margin improvements within the business," said East in a statement.

He commented that Rolls' transformation package was well underway with more than £60m of incremental in-year saving achieved in 2016. A further £80m-£110m more in-year benefits were expected in 2017. The company was on track for a roughly £200m run rate by end-2017.

Looking ahead, Rolls saw modest performance improvements, targeting free cash flow similar to that in 2016. Completion of the ITP acquisition was expected in mid-2017.

Finally, FY revenue was £14.96bn, up 9% from a restated £13.73bn. EPS was -220.1p a share, from 4.5p.

At 9:03am: (LON:RR.) RollsRoyce Group PLC share price was -21.75p at 718.25p