Rolls-Royce Holdings PLC, known for manufacturing jet engines and high-end cars, cut its dividend by half for the first time in 25 years Friday, as it announced that full-year profit fell 12 percent. However, investors cheered the move, pushing the stock up almost 16 percent Friday, the biggest intra-day gain for the company since 2002.

The company, which has issued five profit warnings in the last two years, maintained its earlier forecast of a 650 million pound ($943 million) hit to 2016 earnings from slower sales of marine turbines and falling demand for older wide-body jets.

"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," Russ Mould, investment director at AJ Bell, said in a note, cited by BBC.

The stable forecast “should help stop the rot in sentiment,” Sandy Morris, an analyst with Jefferies International, said in a note, cited by Bloomberg.

On Friday, the company said it would pay shareholders a final dividend of 7.1 pence per share compared to the 14.1 pence it paid out last year, a bigger reduction than analysts expected. "The cut [in dividend] is much more aggressive than expected with most investors predicting a cut of around 30 percent," Joshua Raymond, market strategist and forex broker at, said in an emailed statement to International Business Times.

Rolls-Royce CEO Warren East, who came to the helm of the world’s second-largest maker of aircraft engines in July, said that the dividend cut would help the company shore up its finances and pay restructuring charges, projected to be around $100 million in 2016. 

"Subject to short-term cash needs, we intend to review the payment so that it will be rebuilt over time to an appropriate level," East said in a statement Friday.

In November last year, the company announced 3,600 job cuts and said it would cut down top management by about 20 percent.

Rolls-Royce makes engines for the Airbus A380 superjumbo, the Eurofighter Typhoon fighter jet, and the Boeing 787 Dreamliner, along with submarine engines for the U.K. Navy.