Rolls-Royce suffered a record headline loss of £4.6 billion today as a fine to settle bribery charges and the collapse in the pound from Brexit capped a difficult few years for the British aero engine maker.
Already reshaping its business after a series of profit warnings, Rolls said it needed to cut more costs after its underlying profit halved to £813m last year - a result that was better than analysts' expectations.
Chief Executive Warren East, brought in to restructure the group in 2015, said the business portfolio was "broadly correct".
But he added that he needed to review 20% of its operations, and would decide on further actions in the coming months.
Rolls-Royce, which makes engines for wide-body civil jets, and defence and marine customers, said it expected "modest performance improvements" this year and would aim to keep its free cash flow at a similar level to 2016.
"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," East said.
Last year, the group halved its dividend to shore up its finances, the first cut in the payout for 24 years.
It kept the dividend at the same level this time, a move it said would allow it to maintain a degree of flexibility in its balance sheet.
The drop in the pound against the dollar resulted in a £4.4 billion non-cash charge on its hedging book, which increased to $38 billion. Most aircraft deals are priced in dollars, forcing Rolls-Royce to hedge future income.
The headline loss also included the £671m it agreed to pay to settle bribery investigations in Britain, the US and Brazil last month. The sum is payable over five years, but Rolls-Royce has taken the full charge now.
Rolls said it was well under way with its transformation programme, achieving £60m in savings in 2016, and was on track for its 2017 targets too.
In its troubled marine division, which has been hit by weak demand from shipping and energy customers, it took a £200m goodwill impairment to reflect a more cautious outlook.
The group has also been hit by a slowdown in high-margin aircraft engine servicing, in part caused by reduced use of older aircraft, and lower sales of its Trent 700 engine that powers the Airbus A330, which is being superseded by the A330neo.
