A bribery settlement and a crash in the pound have pushed engineering giant Rolls-Royce to a record loss. The jet engine maker reported a loss before tax of £4.6bn for 2016.
However, once one-off costs have been stripped out, the company’s underlying profit was better than many experts had predicted.
Rolls-Royce agreed to pay £671m to settle corruption cases with UK and US authorities and it has written off £4.4bn from currency related contracts.
Like many international businesses, Rolls-Royce usually “hedges” its bets to protect itself from fluctuating currency markets.
Most international aerospace contracts are priced in dollars, but, as a UK company, much of Rolls-Royce’s costs are in pounds.
Underlying profits, which ignore these factors, fell to £813m, down from £1.4bn the previous year, although the fall was much less than many analysts had forecast.
Rolls-Royce, which has been a completely separate company to the car-maker since 1971, said the outlook for this year was for a “modest performance improvement”, while chief executive Warren East said more needed to be done to improve profit margins.
Rolls-Royce has apologised “unreservedly” for the corruption cases, which spanned 25 years, and involved illegally using local middlemen and paying bribes to win deals in Indonesia, Thailand, China and Russia.