British engine maker Rolls-Royce issued another gloomy profits warning on Thursday that cited “sharply weaker” demand, sending its shares slumping by almost a fifth.
“There have been developments in aerospace and marine markets that have created additional headwinds,” the group said in a trading update.
For 2015, Rolls-Royce cautioned that its pre-tax profit would be “at the lower end” of its forecast range of between £1.32 billion and £1.47 billion ($2.0 billion and $2.2 billion, 1.9 billion euros and 2.1 billion euros).
Looking ahead to next year, the company said it would face “profit headwinds”, or negative impact on profits, of £650 million in 2016. That compared with a previous estimate of £300 million from July.
Rolls-Royce added that the “negative outlook” reflected “sharply weaker demand in 2016”.
In reaction, the company’s share price tumbled by 16 percent in opening deals on the London stock market.
Chief executive Warren East, who launched a review of the group after taking charge in July, will meanwhile launch a new restructuring plan.
The cost reduction programme will target savings of between £150 million and £200 million per year from 2017 onwards, the group said.