Rolls-Royce Reports Record Loss Of £4.6Bn

[mikey4444]

http://www.bbc.co.uk/news/business-38966165

What amazes me is that companies can record eye-wateringly huge losses, and still stay in business. According to the Today program a few minutes ago, the share price will probably go up today !

Madness !

[Old_Geezer]

Well, one doesn't have a bribe settlement every year. I guess investors are looking at future potential.

[Old_Geezer]

Makes one wonder how they are achieving that loss though. Surely they'd do better sat down doing nothing.

[mikey4444]

OG...I always wonder how a company that has made losses on this massive scale can still be solvent ?

[naomi24]

This is a loss calculated over one period. It doesn’t mean Rolls Royce is broke – or broken.

[Zacs-Master]

'However, once one-off costs have been stripped out, the company's underlying profit was better than many experts had predicted.'

'Underlying profits fell to £813m, down from £1.4bn the previous year, although the fall was much less than many analysts had forecast.'

[mikey4444]

Well....thats OK then isn't it Zacs !

[Zacs-Master]

Apparently so. Investors look at the Long term share trends not just blips and the trend is still up, hence the price going up.

[mikey4444]

Genuine question.....if Rolls Royce made such a huge loss during 2016, can I presume that no dividends were paid out to shareholders that year ?

[Zacs-Master]

Assuming you're talking about C shares and not Ordinary shares, info here:
https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/c-share-test-historical-information-jan-2017.pdf

[-Talbot-]

Do some research and see how many future orders worth billions are in the pipeline.
Maybe you will then understand why they stay in business.

[Togo]

http://www.msn.com/en-gb/cars/other/2018-rolls-royce-cullinan-suv-new-spy-pictures/ar-AAl0Uzk?ocid=spartanntp

http://www.msn.com/en-gb/money/technology/rolls-royce-plans-crewless-ships-by-2020/ar-AAmQTtd?li=BBx1bGE&ocid=spartanntp

Rolls Royce appear to be ignoring Mikey's "concern" and planning for the future. If Mikey is predicting that RR is a busted flush, it is obviously time to buy shares in the Company.

[mikey4444]

I am not predicting anything of the sort. I wish RR to be a going concern, as an awful lot of jobs depend on that being the case.

But part of its problems lie in its previous criminal activity of paying bribes.

[Zacs-Master]

Investors and stock brokers aren't sentimental.

[mikey4444]

Zacs....nor would I expect them to be, but I would expect that the bosses of such a large company not to be engaged in criminal behaviour.

[Zacs-Master]

As Tom Jones sang....Its not unusual.

[mikey4444]

Apparently not Zacs !

[RandyMarsh]

They have a £30 billion hedge fund behind them.

[mushroom25]

read the RR judgment here:-
https://www.judiciary.gov.uk/wp-content/uploads/2017/01/sfo-v-rolls-royce.pdf

the loss posted by RR is but small change when set against the loss posted by RBS in 2008.....

[AKMild]

Although the numbers are eye-wateringly huge to most 'ordinary' people, it is important to appreciate that profits/losses do not necessarily correlate to cashflow - a company can be very profitable but fail because of a tight cashflow. Conversely, a company recording losses can survive provided its cashflow is sufficient to meet its needs. Profits and losses can be affected by bookkeeping adjustments that to not involve movement in cash. For instance, a large loss might be charged against a company's accumulated reserves, but that doesn't mean that cash has flowed out of the business. Similarly, a company may have made a handsome profit when the value of its property rose, but that profit is not matched by an increase in cash (unless the property were to be sold).

The share price reflects both the underlying net asset value of the company and a premium or discount based on the market's sentiments for the company's forecasts and general market forecasts. Often, the market has already factored in expected profits/losses to the company's share price, so the announcement of a huge loss will not necessarily adversely impact the share price. Indeed, recording the loss (as opposed to just forecasting it) provides the market with certainty, and markets like certainty, which can sometimes lead to an increase in share price when these sorts of announcements are made.

There are so many factors that go into the determination of a share price and of course, predicting these is what analysts and fund managers do for a living.