Posted on 02/13/2015 10:24:31 AM PST by thackney
The oil price plunge and global economic uncertainty have forced engineering giant Rolls-Royce to cut its profit forecasts again. Last year, the company issued two profit warnings. The company reported Friday that its underlying revenue fell in 2014 for the first time in a decade, as customers, oil and gas companies, cut back on spending amid the price plunge.
The world's second-largest aero-engine company pledged to take concrete actions to restore credibility as it reported an 8% fall in underlying pre-tax profits for 2014- the first such decline in over a decade. The company said that the plunge in oil prices has created "increased uncertainty" for many of its clients, particularly in the marine offshore sector.
Rolls-Royce ship design for the offshore industry, UT-Design, covers platform supply, anchor handling, cable-laying and multi-purpose vessels as well as seismic survey, intervention service and drilling vessels. The company is the largest supplier in the maritime business for propulsion and motion control systems, winches and deck systems and has a full line of medium-speed diesel engines for propulsion and auxiliary powers.
But as its oil and gas customers scale back on operations, delay or cancel projects and slash spending, Rolls-Royce finds its client-base contracting.
Rolls-Royce CEO John Rishton said in a statement that the company's fundamentals were "solid" but characterized last year as "mixed" because of "reduced spending by our defense customers, macroeconomic uncertainty and falling commodity prices."
In recent months, the company has reduced its headcount by 2,600 jobs and revealed plans to overhaul its Land & Sea divisions and Aerospace segments.
He said, "In response to these headwinds, we are taking decisive action to improve the group's financial performance and accelerating our focus on the four Cs: customer, concentration, cost and cash."
The company's marine and power systems divisions, which depend heavily on the offshore oil sector, experienced underlying profit before financing fall 41% and 14%, respectively.
Aww, where’s my hankie?
I thought this meant they are building a giant Rolls-Royce. Maybe five times bigger than a Hummer or something.
I thought this meant they are building a giant Rolls-Royce. Maybe five times bigger than a Hummer or something.
I was a lead engineer for a pipeline project where we bought 11 Rolls-Royce 42,000 HP NatGas Turbines turning the pipeline compressors.
They make good stuff. I don’t know much about it.
Don’t they make jet parts?
Since when does the profit of a AUTO MAKER depend on oil prices?? You would think that HIGHER prices would hurt business. I would think the world economy in general would be a much bigger factor.
Someone looking for an excuse.
Yes my SIL works for them here in Indiana.
The car division was sold to BMW 15 yrs ago.
Not the auto maker Rolls-Royce. That’s owned by BMW.
This is Rolls-Royce Holdings, mostly makes aircraft engines but also has energy companies.
You’re a bit behind the times, the RR brand has been a div of BMW since 1998.
Id heard that, but forgotten.
Rolls Royce makes propulsion systems and equipment for the maritime industry to include offshore oil rig support vessels. The low oil prices are causing a depression on that industry and that will affect Rolls Royce.
Rolls Royce bought GM’s Allison Turbine Engine Division (based in Indy) in the 1990’s.
Therefore, they make the Engines for C-130’s and V-22 Osprey’s and Bell (like the Jetranger) and McDD(like the MD500) legacy helicopters.
The make jet engines for sure. Those industrial turbines we used were RB211 derivatives. During the project I was surprised to learn the Continental 757 I was riding in was essentially the same engine.
Reading more than the headline can be informative and lead to better posting.
Well gas is going back up so they wont be hurt for long.
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