British engineering company Rolls-Royce cut its profit forecasts for this year and next, citing continued weakness in oil and gas markets plus lower demand for some of its aero-engine programmes.
The downgrade, the latest in a series by the company, comes four days after new chief executive Warren East took the helm.
For 2016, Rolls-Royce said lower demand and pricing for its Trent 700 engines, reduced demand for its business jet engines and some weakness in its after-sales business would cut profits by £300 million.
Shares in Rolls-Royce dropped 7.6 per cent to 788.8 pence in early trading.
Analysts at Jefferies said Rolls-Royce’s new guidance appeared to forecast 2016 pretax profit of £1 billion, 35 per cent lower than their current estimate.
Rolls-Royce said yesterday 2015 profit would come in between £1.325 billion and £1.475 billion, as much as five per cent lower than it had previously guided, due to a further deterioration in energy markets which would affect sales of marine engines.
The company is already in the throes of a rationalisation programme to improve profitability in its aerospace division, which accounted for almost half of 2014 revenues and has benefited from soaring demand for more fuel-efficient engines for passenger jets but has lagged market leader General Electric on profit margins.
In May, it also began a cost-cutting plan in its marine unit. That business builds propulsion systems, winches and anchors for ships, and depends on oil and gas-related customers for about 60 per cent of its business.