defence cuts: Blow to Rolls Royce profits growth

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ROLLS-ROYCE said sharp cuts in defence spending by the US and European governments would prevent any growth in profits in 2014, driving its shares down 12 per cent and wiping almost £3bn off its value.

In a break from the decade-long profit growth that the British firm has enjoyed, the world’s second-largest aircraft engine maker behind US group General Electric, said the “pause” in revenue and profit growth would follow a strong performance in 2013. It expects a return to growth in 2015.

“We’ve defied gravity for a couple of years compared to many other companies and now we’re having the impact come together in one year,” said the company’s chief executive John Rishton of the forecasted decline in defence revenues.

The company expects a 15 to 20 per cent fall in revenue and profit from defence aerospace and a modest reduction in revenue but modest growth in profit from the Marine unit in 2014, it said.

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