Rolls-Royce posts record loss after bribery charge and tough market conditions

Excluding bribery penalties and the impact of currency fluctuations, the company reported underlying revenues of £13.8bn and pre-tax profits of £813m for 2016.

Rolls-Royce has suffered the biggest loss in its history after settling corruption charges and the impact of Brexit on the value of sterling.

The engineering giant reported a £4.6 billion pre-tax loss for 2016, one of the biggest corporate losses in British history.

The loss included a £671 million charge for the penalties the company has agreed to pay to settle bribery and corruption charges with the Serious Fraud Office, the US Department of Justice, and Brazilian authorities.

Excluding the bribery penalties and the impact of currency fluctuations, Rolls-Royce reported that underlying revenues fell 2% in 2016 to £13.8 billion and that underlying pre-tax profits fell 49% to £813 million in the year. This was ahead of forecasts.

Warren East, chief executive, said: "2016 has been an important year as we accelerated the transformation of Rolls-Royce. Despite the significant market and aerospace product transition challenges identified in 2015, we have made operational progress and performed ahead of our expectations for the year as a whole. At the same time we have delivered major changes to our management and processes and, while we have made good progress in our cost cutting and efficiency programmes, more needs to be done to ensure we drive sustainable margin improvements within the business.”

He added: "In the meantime, we will continue to focus on our key milestones. In civil aerospace, we need to introduce our new Trent engines and successfully deliver the ramp up in engine production. At the same time 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."