Rolls-Royce crashes £4.6bn into the red

ENGINEERING giant RollsRoyce has suffered one of the biggest losses in British corporate history after being rocked by a bribery scandal and the weak pound.

The Derby-based firm, which makes engines for aircraft and equipment for the nuclear, oil and gas industries, reported an annual loss of £4.6bn for 2016.

That was the worst performance in the company’s 133-year history and came after Rolls agreed to pay £671m to the authorities in the US, UK and Brazil to settle claims it bribed officials to win contracts.

The losses included a £4.4bn hit as a complex currency hedging programme went wrong.

But Rolls saw profits fall in every division. Underlying profits fell 49pc to £813m and the dividend for 2016 was cut from 16.4p a share to 11.7p a share.

The stock fell 4pc, or 29.5p, to 710.5p. Chief executive Warren East insisted the company was turning a corner but added: ‘2017 remains a challenging year and we have lots of opera- tional improvements to do.’ The company’s struggling marine division lost £27m.

In December Rolls announced 800 job losses in the division as falling oil prices hit customers.

Its biggest division, civil aerospace, which makes jet engines, saw a 60pc fall in profit to £ 367m, while profits at its defence arm fell 8pc to £384m.

They are the first full-year results for East, who took the helm in July 2015.

He has so far cut about 700 management roles and replaced them with engineers to ramp up production.

East, 55, said it was ‘ highly unlikely’ the company would exit any areas of business.

More job losses could not be ruled out, he added.

The company has typically brought forward in its accounts revenues from servicing, but will no longer be able to do so next year due to changes in accounting rules. It is thought that could lead to around £900m less in reported profits.

Rolls has been rocked by claims it bribed officials to win contracts between 1989 and 2013. It appointed lawyer Lord Gold to lead a review into compliance but the report will not be published for a few years.