British engineering company Rolls-Royce has cut its profit forecasts for this year and next. As Amy Pollock reports they blame continued weakness in oil and gas markets plus lower demand for some of its aero-engine programmes.
British engineer Rolls-Royce is faltering. The company issued its third profit warning in nine months and halted a 1 billion pound share buy-back scheme halfway through the programme. Shares in the 131-year-old company fell as much as ten percent on the news. Rolls-Royce puts its poor performance down to external factors. Mike Ingram is from BGC partners. (SOUNDBITE) (English) MIKE INGRAM, MARKET ANALYST, BGC PARTNERS, SAYING: "I think emerging markets are clearly having some trouble at the moment and that's impacting across their business lines and also their marine unit seems to have been significantly impacted because of the low oil price." Questions have been raised about the future of the aero-engine part of the business as the company switches from its Trent 700 engine to the newer Trent 7000. Alastair McCaig is at IG. (SOUNDBITE) (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "They've had a number of issues with some of the Trent projects that they've been overseeing, 2016 already being outlined as a difficult looking environment with which they are going to have to work." Rolls-Royce's new CEO only took the controls four days ago. Warren East, formerly of ARM Holdings, said his fundamental confidence in the business was not shaken. His new style of openness about the state of the company is something investors welcomed. (SOUNDBITE) (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "It's best to open up the closet doors and get as many skeletons out as he possibly can. He's replicating a path trodden by many in the last couple of years. It will be interesting to see what fresh plans he brings to the table once the melee on the back of this profits warning has died down." With an operational review of the company coming up, and cost saving programmes already underway, markets will be hoping East can pull Rolls Royce out of its current nose dive.