LONDON—British aircraft engine maker Rolls-Royce Holdings said earnings this year could benefit from currency effects even as it signaled that first-half results would only be "close to break-even."

Rolls-Royce, which makes engines for Boeing Co. and Airbus Group SE long-range jetliners, said Thursday that if currency exchange rates remain at the level seen to date, reported revenue would improve by £ 450 million ($654 million) and reported profit before tax by around £ 50 million. Many of Rolls-Royce's sales are dollar denominated. The weakness of the British currency against the greenback could help to move earnings higher.

The company's outlook, which strips out the currency effect, it said ahead of the company's annual shareholder meeting.

Rolls-Royce is recovering from a series of profit warnings that led it to cut its dividend for the first time since 1992 after profits slumped. The company has seen lower demand for some of its most profitable products and struggled with the impact on demand from low crude prices on its marine and power-systems operations.

"Despite steady market conditions for most of our businesses, 2016 continues to be a challenging year overall as we sustain investment and start to transition major products in Civil Aerospace, and tackle weak markets in Marine," Chief Executive Warren East said.

The company, which previously warned profit would primarily come in the second half of this year, reported that profit before financing charges and tax would be near break-even in the first six months. Free cash flow would also be higher in the second half of 2016.

The shareholder meeting, Mr. East's first as CEO at Rolls-Royce, comes after months of turmoil for the company that has seen the departure of top executives and U.S. activist investor ValueAct Capital Management LP becoming the company's largest investor. In March, Rolls-Royce appointed Bradley Singer, ValueAct's chief operating officer, to join the board.

ValueAct, which owns more than 10% of Rolls-Royce shares, has pledged not to battle the company until at least the 2018 shareholder meeting.

Restructuring measures, including layoffs, should start bolstering the bottom line, Rolls-Royce said. "We are well on track to delivering the expected cost savings in 2016," the company said, estimated a £ 30 million to £ 50 million benefit by year-end.

Write to Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

May 05, 2016 03:25 ET (07:25 GMT)

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