Rolls-Royce set to post record loss

Rolls-Royce is set to announce one of the biggest ever losses in corporate history this week, according to city analysts.

Reports over the weekend suggest that the company will post a pre-tax loss of £4bn on Tuesday, its worst ever performance, at the end of year that has seen it reeling from Brexit and an alleged corruption scandal.

Rolls-Royce will be forced to follow accountancy rules and write down the value of its currency hedges to mirror sterling’s slump. Derby company hedges billions of pounds to protect itself against currency fluctuations.

The firm has also been hit with a £671m fine agreed with authorities in the UK, US and Brazil that will see it escape corruption charges.

A statement from Rolls-Royce last month read: “These agreements relate to bribery and corruption involving intermediaries in a number of overseas markets, concerns about which the company passed to the SFO from 2012 onwards. These are voluntary agreements which result in the suspension of a prosecution provided that the company fulfils certain requirements, including the payment of a financial penalty.”

Despite this, chief executive Warren East, who was brought in to turn the company around, has told shareholders that the underlying performance is improving. Reports suggest that those in the City have been told that underlying profits in 2016 were £687m, down from £1.4bn in 2015. However, they are predicting a rise back to £861m this year.

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