Rolls-Royce revenues fall due to sanctions against Russia

Rolls-Royce Holdings has warned of falling revenues as trade sanctions against Russia begin to bite.

Customers of Rolls-Royce’s nuclear, energy and power systems businesses have delayed or cancelled orders, the company said in a trading update.

As a result, group underlying revenue for 2014 would be 3.5%-to-4% lower than expected, it said.

However, Rolls-Royce expected underlying profit to remain flat as cost savings counterbalanced the falling revenue.

“Since our interim results, the economic outlook for 2015 has become more challenging,” the company said, with many of its customers experiencing “worsening market conditions” affecting their investment decisions.

Guidance on revenues for its civil aerospace, defense aerospace, marine and power systems divisions, remained unchanged, the company said.

Nuclear and energy revenue guidance would fall from 0%-to-5%, down from 5%-to-10%.

However, Rolls-Royce expected underlying profit in its civil aerospace division to be higher than previously thought.

“While the short term is clearly challenging, reflecting the economic environment, the prospects for the group remain strong, driven by the growing global requirement for cleaner, better power,” said chief executive John Rishton.

Rolls-Royce’s share price fell 7.5% in early morning trading as the market reacted negatively to the revenue warning.