Brexit: Companies say it’s business as usual

Two major British companies, engine maker Rolls-Royce and the insurer Legal & General, have sought to reassure shareholders in the wake of the UK’s vote to leave the European Union.

Rolls-Royce, which wrote to staff in the run-up to the referendum to say it wanted to remain, said: “Although this is not the outcome the company would have chosen, Rolls-Royce remains committed to the United Kingdom where we are headquartered, directly employ over 23,000 workers and where we carry out a significant majority of our research and development.”

It said the decision would have no immediate impact on its day-to-day business, while the longer term impact would “depend upon the relationships that are established between the UK, the EU and the rest of the world over the coming years”.

The Derby-based group, which makes engines for aircraft and ships, said trading between January and May had been in line with expectations and that the outlook for the year as a whole was unchanged.

It expects underlying profits before financing charges and tax to be “close to break even” for the first six months of the year. The second half should be better thanks to large engine deliveries, good growth in revenues for engine servicing, and benefits from restructuring programmes.

Chief executive Warren East is working to turn the company around after a series of profit warnings. It has been hit by falling demand for corporate jets in emerging markets, cuts to defence budgets and plunging oil prices which have led energy companies to cut back investment.

Meanwhile, Legal & General said long-term trends, such as ageing populations and globalisation of asset markets, were “substantially unaffected by the EU referendum result”.

The company said it had been planning for a 50-50 probability of a vote for the UK to leave, and had de-risked its portfolios in the run-up to the referendum, for example by reducing its exposure to European banks’ subordinated debt. As a result, its balance sheet had “demonstrated its resilience to market volatility,” it said.

The insurer added: “We have not taken any action as a result of the downgrade of UK sovereign debt by Moody’s, Standard & Poor’s and Fitch because we had already treated UK sovereign debt as AA rated in our internal model.”

Shore Capital analyst Eamonn Flanagan said the insurer had issued a “pretty robust statement in response to the market turmoil following the Brexit vote”.