Engine maker Rolls-Royce logs record loss of £4.0bn

Rolls-Royce aircraft engine

An exhibitor stands in front of a booth displaying Rolls Royce aircraft engines. REUTERS Bobby Yip

British luxury auto maker Rolls-Royce on Tuesday reported a record loss of 4.6 billion pounds ($5.7 billion), the biggest in the company's history.

The loss in the latest year reflected a large, noncash accounting hit from the revaluation of USA currency hedges after the British pound slumped.

Rolls-Royce, best known for making aircraft engines for Boeing Co. and Airbus SE long-range planes, reported a £83 million profit the year prior.

The company was fined £671 million in January to settle bribery and corruption claims probed by Britain's Serious Fraud Office and authorities in Brazil and the United States. Shares fell just under 3%, or 21p to 719p, in early trading.

Rolls-Royce predicts that its civil aerospace arm will deliver "modest" revenue growth this year, backed by aftermarket business for large engines, but business-jet revenues will weaken further.

But added sales at its marine engines, which services the oil industry, unit fell 24% previous year due to low levels of activity in the oil and gas sector as a result of lower crude prices.

Warren East, chief executive, said: "2016 has been an important year as we accelerated the transformation of Rolls-Royce". "The pace of technology change in the sector is accelerating, and we continue to invest in pioneering research into Ship Intelligence technologies focused on data-driven value-added services that facilitate full ship automation in the long term", it said.

Leaked documents and testimony from insiders suggested that hired intermediaries had been used to funnel illicit payments to key officials and politicians. "There are lots of questions for the business about where it is going but this huge loss should not blind investors to some solid fundamentals".

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