Rolls-Royce Holdings Plc made an official statement today that it has reduced its full-year sales projection. The company expects its revenue to decline instead of staying unchanged due to delayed customers orders and the trade sanctions imposed on Russia.
The Chief Executive Officer of the U.K.-based engine manufacturer, Mr. John Rishton, said in the statement, cited by Bloomberg: “Since July the economic environment has changed. It’s deteriorated and deteriorated quite rapidly. Our strategy is unchanged and outlook in the medium term is unchanged, but the path to get there is going to be a little bit bumpier.” As reported by the Financial Times, Mr. Rishton also added: “The economic outlook for 2015 is more challenging and those conditions have clearly been affecting our customers.”
According to Rolls-Royces announcement, the companys sales are expected to fall by 3.5% to 4%. The company also said that its free cash flow in 2014 is to be approximately £350 million ($561.4 million), excluding adverse foreign exchange translation of £500 million. In comparison, the previous forecast by the company pointed to a figure of £780 million.
In February 2014 the Rolls-Royce investors were surprised by the companys announcement that its profit and sales growth will be slower. The market conditions worsened, especially over the past month.
Direct sales of Rolls-Royce in Russia generated a bit more than £100 million of the total £15.5-billion in revenues.
In addition, some customers were pressed by tighter Russian trade sanctions, which made them delay or even cancel orders. This also hurt Rolls-Royce, which reduced its forecast for nuclear and energy sales. Still, the company kept its sales projection for the results of its civil aerospace unit.
Rolls-Royce Holdings Plc lost 14.11% to trade at GBX 807.83 per share by 11:17 GMT, marking a one-year decrease of 24.85%. The company is valued at £17.74 billion. According to the Financial Times, the 19 analysts offering 12 month price targets for Rolls-Royce Holdings Plc have a median target of GBX 1 170, with a high estimate of GBX 1 440 and a low estimate of GBX 860.00. The median estimate represents a 24.40% increase from the last price of GBX 940.50.
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