ENGINE maker Rolls-Royce, which employs around 1,400 people in Scotland, has slashed its dividend to save cash after suffering a 12 per cent fall in profits as the crude price plunge weighed on the business.

The company made £1.4bn underlying pre tax profits in 2015 compared with £1.6bn in the preceding year in a reverse chief executive Warren East said was mainly due to a weak performance in the marine division.

Rolls Royce said the downturn in the oil and gas industry resulted in significant deterioration in the offshore market.

The fall in the marine market was offset by growth in Rolls Royce’s civil aerospace business, which has big engine maintenance operations in Renfrewshire.

However Mr East said the board decided the company should halve its dividend to help ease the pressure on cash that is resulting from the firm making the investment required to transform the business.

The cut was the first the company has made in 24 years.

But shares in the company rose 14 per cent yesterday after Rolls Royce dashed fears it would issue another profits warning.

Rolls Royce had issued its fifth profit warning in two years in November as a result of weak demand and low crude prices.

Mr East said Rolls Royce had made a good start to the journey that will return it to profitable growth. The company announced a transformation programme in November under which it is cutting senior management jobs and simplifying the divisional structure.

The company has not said how the programme will impact on Scotland, where it recently completed a big shake up of its aviation support operations.

Rolls Royce closed its 60-year-old engine maintenance plant at East Kilbride in December and transferred the operations and employees to Inchinnan.

Around 1,300 people work at the Renfrewshire plant. This won a vote of confidence in July, when Rolls Royce announced plans to invest £60m in expanding the range of work completed at the site.

The company said the move would result in it creating around 130 jobs.

In March last year it was announced that 200 jobs were to go at Inchinnan and East Kilbride. Rolls Royce had launched a plan to cut 2,600 jobs globally in November 2014 under former chief executive John Rishston.

Rolls Royce expects to benefit from the increase in air traffic which is predicted to result from globalisation and the emergence of a new class of affluent consumers in Asia.

The company employs around 100 people in its marine engineering facility at Dalgety Bay in Fife.

The final dividend for 2015 will be cut to 7.1p per share from 14.1p.The payment for the next half year will also be cut by 50 per cent, from 9.27p per share.

Mr East said the trading outlook for 2016 is unchanged from November. Rolls Royce said then profit would be cut by £650m citing factors such as a slowdown in corporate jet orders and sliding oil prices.

Jefferies analyst Sandy Morris said: "Unchanged 2016 guidance should help stop the rot in sentiment, in our view".

Shares in Rolls Royce Holdings closed up 76p at 606p.