Engine maker Rolls-Royce has posted the biggest loss in its history after it slumped into the red by £4.64 billion after being hit by the pound’s plunge and a corruption scandal.
The blue chip giant said the mammoth pre-tax loss for 2016 came after it was forced to make a £4.4 billion write-down from the collapse of the pound since the Brexit vote, as well as its £671 million penalty to settle bribery allegations.
On an underlying basis, it reported pre-tax profits of £813 million - nearly half the £1.4 billion recorded in 2015.
Rolls, which has a major plant in Barnoldswick, said it was on track with efforts to slash costs and is expecting a “modest” performance improvement in 2017.
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.
Sir 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 £671 million fine over five years, with a £293 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 under-pressure firm, said it was “now time to look further ahead”.
He added: “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 £160 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 dollar since the Brexit vote.