British engineering group Rolls-Royce on Friday reported the first fall in its annual sales in a decade last year and warned of an even worse performance in 2015, on the back of defence cutbacks and falling oil prices that has hit its offshore business.
Rolls Royce has been hit by a fall in defence orders following western trade sanctions on Russia, which has led to a number of delayed or cancelled orders, particularly in its nuclear and energy and power systems businesses.
Rolls-Royce said its underlying revenues slid 6 per cent to £14.588 billion during the year.
Net profits collapsed on sliding defence revenues, adverse foreign exchange moves and the sale of its energy business. GE said after tax earnings nosedived to £69 million in 2014, hit by the revaluation of currency hedging, from £1.367bn a year earlier.
Earnings before tax were down eight per cent at £1.62bn in 2014, Rolls-Royce warned in a results statement.
Pre-tax profits this year were expected to be between £1.4 billion and £1.55bn ($2.2bn-$2.4bn), it added.
''2014 has been a mixed year during which underlying revenue fell for the first time in a decade, reflecting reduced spending by our defence customers, macroeconomic uncertainty, and falling commodity prices,'' said chief executive John Rishton in the statement.
The aircraft engine-maker, which is cutting thousands of jobs, said the halving of oil prices to less than $50 per barrel is forcing customers in other businesses also to delay spending plans.
Profit from civil aerospace business rose 12 per cent to £942 million in 2014. But defence profits fell 16 per cent to £366m despite a 12 per cent rise in the order book – the first since 2010. In December, the company completed the first delivery of the Trent XWB to launch customer Qatar Airways for its Airbus A350.
'The external environment has deteriorated in some of our major markets,' Rolls-Royce said in the earnings release.