R-R pension gap grows to e1.6bn
UK – Aerospace company Rolls-Royce – under ratings agency scrutiny for its pension liabilities – has reported a pension deficit of 1.117 billion pounds (1.6 billion euros).
“At December 31 2002, after taking account of deferred taxation, the FRS17 deficit in the Rolls-Royce UK pension fund was approximately 1.1 billion pounds,” the company said in a statement. The figure compares to a 284 million gap in 2001.
Rolls-Royce has a market capitalisation of around 1.3 billion pounds.
On February 7, Standard & Poor’s put Rolls-Royce and nine other European companies on negative credit watch due to their pension fund liabilities. Rolls-Royce, which currently has a rating of A-, could be subject to a two-notch downgrade, S&P said.
“While the company intends to continue to provide a defined benefit scheme, it has commenced consultations with employees over a number of mitigating actions in connection with the provision of pension benefits,” it added.
“We are consulting with our employees with the objective of limiting the financial impact of the current pension fund deficit within the guidance we provided last August,” said chief executive John Rose.
The next actuarial review of the scheme is due to start at the end of this month.
Its pre-tax profit declined 46% to 255 million pounds, which was better than expected by analysts. Turnover fell to 5.8 billion pounds from 6.3 billion pounds. It cut 4,900 jobs in 2002, with a further 900 set to go in early 2003.