Rolls-Royce engine Image: Rolls-Royce

Rolls-Royce has warned that its profits in 2016 will be hit by "headwinds" worth an estimated £650 million as a result of "sharply weaker demand".

The aerospace firm that "selected aerospace and offshore marine markets" were the areas most likely to be affected by weaker demand. Earlier this year, Rolls-Royce said its profits in 2016 and 2017 would be hit by a slowdown in deliveries of its Trent 700 engine.

In addition to the warning on next year's profits, the company also expects this year's profits to be at the lower end of its forecast range. Rolls-Royce had predicted profits of between £1.325 billion and £1.475bn. Its shares plunged 16% after the announcement.

Rolls-Royce chief executive Warren East said: "The speed and magnitude of change in some of our markets, which have historically performed well, has been significant and shows how sensitive parts of our business are to market conditions in the short-term."

The aerospace firm is currently going through a full review of its operations and is planning to cut £150-200m from its costs. The full review will be published later this month.