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Rolls-Royce posts record $A7.5b loss

Press Association logoPress Association 14/02/2017

Rolls-Royce has revealed it slumped to a record loss of STG4.64 billion ($A7.58 billion) in 2016 after being hit by the weak pound and a STG671 million corruption fine.

On an underlying basis, the British engine maker's profit fell by 49 per cent to STG813 million, soundly beating market expectations, on revenue two per cent lower at STG13.78 billion.

The company said it expected "modest performance improvements" this year.

The huge annual loss follows a tough past few years for Rolls after a string of profit warnings and last month's corruption fine to settle a case brought by the Serious Fraud Office (SFO) and authorities in the US and Brazil.

Brian Leveson said on handing down his written judgment in January that the long-running probe revealed "the most serious breaches of the criminal law in the areas of bribery and corruption".

Rolls will pay the STG671 million fine over five years, with a STG293 million payment this year, but has taken the full cost as an impairment charge against 2016 profits.

Rolls chief executive Warren East, who is leading an overhaul at the company, said it was "now time to look further ahead".

"With my new team in place, our focus is turning towards the group's long-term goals.

"Over the next few months we will conclude our review of our strengths and investment opportunities and set out an appropriate vision for the business."

The group's bottom-line loss, which compares with a profit of STG160 million in 2015, comes after it was forced to write down the value its currency hedges to reflect sterling's hefty falls since the June EU referendum.

The pound has fallen by almost a fifth against the US dollar since the Brexit vote last June.

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