Rolls-Royce profits soar

Manufacturing News, Source : TheManufacturer.com
Published : 28 Jul 2005 16:24

Jet engine maker Rolls-Royce has benefited from strong demand from airlines with a 54 per cent rise in its first half profits.

The result prompted its first payout to shareholders in four years.

Underlying pretax profit came in at £260 million; City analysts had expected £229 million. Sales rose to £3.18 billion, up by 14 per cent on an underlying basis.

Higher engine deliveries and growth in revenues from servicing powered the increase, with civil aerospace contributing 64 per cent of the sales rise.

The company's order book reached £21.9 billon, reflecting higher demand for engines to power both Airbuses and Boeings.

Sir John Rose, Chief Executive, said: "We continue to make good progress, demonstrating the increasingly international nature of the business and our broad portfolio of products and services. The higher orders and sales reflect strong market positions and the continuing growth of our services revenues. Our business mix and focus on improved efficiency are contributing to higher levels of profit and cash generation. As a result we have increased our payment to shareholders by five per cent. We remain on target to generate continued growth in profits and reduction of average net debt in 2005."

Rolls-Royce said it had made good progress with its investment programme aimed at overhauling its manufacturing capabilities and infrastructure. New facilities for compression systems, combustion systems, turbines, component services and repair and overhaul are on schedule for completion by 2007. Consequently, the group expects to continue to reduce operating costs, although the rate of cost reduction has slowed in 2005. The level of capital investment is expected to increase in support of this improvement programme.

Looking forward, the Group said it was continuing to invest in new products and technology to strengthen further its presence in power systems markets in the civil and defence aerospace, marine and energy sectors. The aggregate demand for engines and services across all four sectors over the next 20 years is estimated to be worth approximately $2 trillion.

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