* Takes 30 mln stg one-off charge in marine unit
* Says excluding currency, on track for flat FY profits
* Says currency headwinds could impact by 40 mln stg
* Shares down 1.8 pct
(Recasts with comments on energy unit sale, updates share
By Sarah Young
LONDON, May 1 Britain's Rolls-Royce is
hopeful of concluding an estimated 1 billion euro ($1.4
billion) disposal, talks on which it announced earlier this week
as it looks to exit an energy-related business it sees as too
small to effectively compete globally.
Rolls, the world's second-largest maker of aircraft engines
behind General Electric, had on Tuesday announced talks
on the possible sale to Germany's Siemens of its unit
which makes equipment for the oil and gas industry, as well as
power-generation gear for utilities.
Questioned on the deal after Rolls had warned that a one-off
charge in its marine unit would impact its first-half results,
Chief Executive John Rishton said he was reasonably optimistic
of concluding the sale.
"It's a subscale business and in that business you need
scale," Rishton told reporters on the sidelines of the company's
annual shareholders' meeting on Thursday, adding that the unit
had been under review for some time. "Hopefully we will conclude
He declined to comment on the value or timeline of any deal,
but said Rolls was otherwise happy with the shape of the
business and did not envisage any further selloffs.
"I think that we have addressed what I would call the
disposal element as we looked at the portfolio (so) we can focus
on the areas that we are really strong at," Rishton said, noting
that the planned buy-out of Daimler's stake in
jointly owned engine maker Tognum remained "the most important
thing on our agenda at the moment."
Rishton told investors at the meeting that by the end of the
next decade he expected Rolls to return to making engines for
medium-sized aircraft. Its focus in recent years had been on
engines for large aircraft.
"We are committed to finding a way back into that very
important market," he said, adding that there was no rush and
the company would likely seek a partner to do so.
Earlier the group had said in a statement a 30 million pound
charge in its marine unit to rectify a product quality issue
meant profits in 2014 would be weighted to the second half of
the year, though for the full year it remained on track to meet
previous guidance of flat profits if currency headwinds were
The group had disappointed the market in February when it
said U.S. and European spending cuts would result in flat
profits in 2014, bringing a decade of profit growth to an end.
It reiterated on Thursday it expected growth to resume next
In the short term, however, currency headwinds could bite
into profits. At current rates, it estimated foreign exchange
translation effects could lower profits this year by 40 million
pounds ($67.5 million).
The latest consensus among analysts is for Rolls to report a
pretax profit of 1.8 billion pounds, Thomson Reuters data
Some analysts said the foreign exchange impact and the
marine provision amounted to a reduction in guidance.
"I'm slightly surprised at the size of the potential hit
because they do have hedging ... the 40 million seemed a bit on
the high side," Societe General analyst Zafar Khan said.
Shares in the company were down 1.8 percent at 1,031 pence
by 1251 GMT.
Sterling has risen about 4 percent against the dollar
over the past six months and a raft of companies have warned of
the impact, including luxury goods brand Burberry and
engineering company GKN.
Other analysts said the currency headwinds were expected and
shrugged off the one-off provision.
"We have a rather grubby first half and then we have a
rather excellent second half. Is the second half the best
pointer to the future? Because if it is, this company looks to
be in very fine shape," analyst Sandy Morris at brokerage
Rolls said its second half would benefit from cost savings
as well as improved trading, as it begins deliveries of the
Trent XWB engine to be used on Airbus's new A350
Analysts said proceeds from the potential energy disposal
could be used to fund the company's planned Tognum acquisition.
Rolls said on Thursday the purchase, announced in March, would
cost 2.43 billion euros.
($1 = 0.7212 Euros)
(Editing by Jason Neely and David Holmes)