Rolls-Royce Sticks to Forecast as No Brexit Effect Seenby
Company expects no immediate impact from vote to leave EU
Outlook for 2016 is unchanged, with pickup seen in second half
Rolls-Royce Holdings Plc, the U.K.’s biggest manufacturer, said business this year is in line with expectations and reiterated that the country’s vote to leave the European Union will have no immediate effect on the company, offering investors a rare bit of good news after days of turmoil in the markets.
Underlying profit before financing charges and tax is expected to be close to break-even in the first half, the London-based maker of jet engines said in a statement Tuesday, reiterating a forecast from May. The outlook for the full year is unchanged, and business will pick up in the second half with increased deliveries of large engines, it said.
The manufacturer told staff earlier this month that a referendum decision for Britain to exit the EU, known as Brexit, would limit the company’s ability to plan and be “unsettling” for business. The forecast on Tuesday is all the more reassuring because Rolls-Royce has struggled in recent years, warning investors six times of disappointing profits amid slowing business-jet sales and weak demand at the unit that makes marine engines.
Talks on the terms for the U.K.’s withdrawal from the EU have yet to be set. U.K. Prime Minister David Cameron, who will meet other leaders from the bloc later Tuesday, said when announcing his resignation on Friday that his successor will be the one to trigger the departure process.
Another U.K. company also cheered up investors Tuesday, as online grocer Ocado Group Plc said it has seen “no reaction at all” from customers to the Brexit vote. Ocado jumped 9.8 percent to 228.4 pence as of 9:53 a.m. in London. Rolls-Royce rose 2 percent to 665 pence.
“We certainly don’t expect any negative short-term impacts, and we’re not sure whether there will be negative medium-term impacts either,” Ocado Chief Executive Officer Tim Steiner said on a conference call with reporters. “We are hoping to be a substantial exporter, and the sterling weakness makes that product cheaper for our potential international customers.”
The medium- and long-term effect on Rolls-Royce of the vote last week “will depend upon the relationships that are established between the U.K., the EU and the rest of the world over the coming years,” the company said Tuesday.
“Although this is not the outcome the company would have chosen, Rolls-Royce remains committed to the United Kingdom where we are headquartered, directly employ over 23,000 talented and committed workers and where we carry out a significant majority of our research and development,” the manufacturer said.