Prominent British carmaker and aircraft engine creator Rolls-Royce announced that it would be slashing its final dividend by 50 percent, the first time the company would be doing so in 25 years. It stated that the current year would be "challenging," but despite the outlook, however, the company's shares still soared on Friday trading, according to The Daily Record.
Apart from the dividend cut announcement, the British company also announced that its overall sales went down 1 percent, to about $19.41 billion. Rolls-Royce stated that civil aerospace cuts and the continued decline of the oil market are to blame for the company's decision to cut its dividends.
The announcement, however, has triggered the a surge in the company's share prices, with its stocks rallying 16 percent during Friday trading. Russ Mould, investment director at AJ Bell, stated that the announcement ultimately signified good news for investors, reports BBC News.
"Investors breathed a sigh of relief that the group did not issue a further profit warning and that it only cut its dividend whereas many feared it might be scrapped," he said.
The company's net profits have exhibited significant gains, rising 20 percent to $120.26 million in 2015, a significant increase in its net profits from the previous year, reports The Economic Times.
Rolls-Royce's order book also swelled last year, rising 4 percent to $110.70 million last year.
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