Rolls-Royce shares fall as investors worry on outlook

British aerospace and industrial power engineering company Rolls-Royce reiterated its forecast for 2016 but said it expected the bulk of profits would only come through in the second half of the year, worrying investors.

Concerns over the scale of the challenge faced by Rolls-Royce to deliver on forecasts sent shares in the maker of aircraft engines down 6% at one stage.

The fall in the stock’s value yesterday followed its 22% rise since mid-February when it maintained its 2016 forecast, giving investors confidence that it had turned a corner.

The company, seeking to convince investors that the company’s financial performance had stabilised after downgrading profit forecasts three times last year, said it expected to be close to break even for the first six months of the year.

“This leaves Rolls with a lot to do in the second half of the year if it is to meet its 2016 targets,” Royal Bank of Canada analysts said.

Rolls-Royce has over the last two years been hit by cancelled orders from oil industry customers for power systems after a plunge in the oil price and a slowdown in demand for the high-margin aftermarket servicing it provides for older aircraft engines.

Analysts expect Rolls-Royce’s 2016 pretax profit to halve to £642m (€810m), down from £1.36bn in 2015.