Rolls-Royce £4.6 loss - biggest in its history

Derby & Hucknall sites
Derby & Hucknall sites

A bribery settlement and the fall in the pound after Brexit have forced Rolls-Royce to post a record loss before tax of £4.6bn for 2016.

It is one of the biggest corporate losses in British history - the biggest was the £24bn recorded by Royal Bank of Scotland for 2008.

This loss included a £4.4bn writedown on the value of financial hedges that the firm uses to protect itself against currency fluctuations and a £671m charge to settle bribery and corruption charges with the Serious Fraud Office (SFO), the US Department of Justice, and Brazilian authorities.

Rolls reported that underlying revenues fell 2 per cent in 2016 to £13.8bn and that underlying pre-tax profits fell 49 per cent to £813m.

The firm cut its dividend last year for the first time in 24 years. It is the biggest loss for the company since it was founded in 1884.

Chief executive Warren East, who took over in 2015, said more needed to be done to improve profit margins.

He said: “We must ensure our wide ranging business transformation programme delivers the full benefits expected, not only in terms of cost savings but also the cultural and behavioural changes necessary to ensure the transformation is sustained and high standards of business conduct are maintained. These are essential if we are to become a more trusted, resilient company.”

Rolls-Royce has apologised “unreservedly” for the corruption cases, which involved illegally using local middlemen and paying bribes to win deals in Indonesia, Thailand, China and Russia.

The firm, which employs about half of its 50,000-strong workforce in the UK, has been axing jobs as part of a cost-cutting overhaul. Around 850 people are employed at the Hucknall site.