Rolls-Royce half year results

Posted on 17 Dec 2009 by The Manufacturer

Rolls-Royce reports progress in the first half of 2009, with its order book, revenues and profits all increasing.

The Group’s market positions have enabled it to secure orders worth £7.9bn in the first-half, increasing the order book by 4% to a record £57.5bn. Revenues increased by 27% to £5,142m, a performance that was positively impacted by the weakness of the GBP against the USD and Euro. Underlying revenues improved by 17% — with a 27% growth in original equipment revenues and an 8% increase in service revenues.

Basic earnings per share were 100.87p, reflecting the mark to market adjustments — with underlying earnings per share increasing by 15% to 19.64p, partly reflecting an improved tax rate. Underlying profit before tax, which excludes the non-cash impact of the hedge book and other financial instruments, increased by 9% to £445m.

The Group’s published profit before tax of £2,515m includes the effects of “marking to market” its financial instruments, for which hedge accounting is not adopted. This effectively reverses much of the revaluations reported in the second half of 2008. The first-half underlying tax charge of £85m benefited from a one-off £21m credit following the successful completion of overseas tax audits. This resulted in a reduction in the first-half underlying tax rate to 19.1%. The 2009 full year underlying tax rate is expected to be around 21%.

The Group reported a net cash outflow of £428m for the period, with £194m of this being caused by the revaluation of currency balances at the end of the period. The remaining outflow of £234m reflected a slow-down in order flow and associated customer deposits, increased inventory and significant investment in the business.

Of the figures, Rolly-Royce chief executive, Sir John Rose, said: “The global trading environment remains very difficult and we believe the recovery is likely to be slow. However, our growing order book, the breadth of the portfolio, our robust balance sheet and the early action we have taken on costs underpin our investment in the business. Our performance in the first half has enabled us to confirm our guidance for the full year and to increase the interim payment to shareholders.”

The report at a glance:

• Order book increased by £2bn to a record £57.5bn
• Group revenues increased to £5,142m. Revenues on an underlying basis increased by 17% to £4,923m
• Services revenues increased by 8% to £2,420m on an underlying basis
• Profit before financing was £593m
• Underlying profit before taxation increased by 9% to £445m
• Net cash outflow of £234m before the impact of a negative £194m foreign exchange revaluation.
• Balance sheet with net cash of £1,030m at the half year
• Average net cash for the period of £760m
• Interim payment to shareholders of six pence per share, an increase of 5% over 2008.