British defense and aerospace group suffers falling demand
One of the UK’s leading defense and aerospace groups has seen a drastic drop in its profits, according to new figures.
Rolls-Royce has seen an almost 57% decrease in profits in the six months leading up to June according to the FTSE engineer.
The figures have forced the British multinational public holding company to cut more than 3,000 jobs in its aerospace and marine departments just months after former chief executive, John Rishton stepped down to be replaced by Warren East.
Rishton was reportedly warned on the challenges facing the company including potential decrease in sales. Meanwhile, an investigation has launched by the Serious Fraud Office to examine corruption allegations against the company.
East said: “The continued growth in our order book demonstrates the long-term demand for our innovative products and services and underpins my confidence in the fundamental strength of our business.
“In the near term, we are managing a significant transition from mature engines to newer, more fuel-efficient ones, such as the Trent XWB, Trent 7,000 and Trent 1,000. At the same time, we are taking appropriate actions to mitigate the effects of weakness in our offshore marine markets.
“While these create a profit headwind in the near term, it is critical we successfully deliver our product launches, complete our supply chain transformation and sustain investment in our businesses to strengthen their competitive positions.”
The data shows the company is suffering from a decline in demand for jet engines as a consequence of the Russian sanctions. Rolls Royce is the second largest maker of aircraft engines in the world but is also heavily involved in the marine propulsion and energy sectors.
In 2011 and 2012, Rolls-Royce was identified as the 16th largest defense contractor in the world. BAE systems, largest defense contractor in Europe and one of the biggest defense companies in the world was also reported to see a 6% fall in profits.
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