Rolls-Royce pledged yesterday to grow earnings this year with the help of a further 2,300 job losses and a strong increase in revenues from its highly profitable aero-engine spares business.
The upbeat message re-assured the markets, despite a new forecast from Rolls that civil aircraft engine deliveries would fall by 10 per cent this year in the aftermath of the Iraq war and the Sars outbreak. Rolls' had indicated deliveries would be on a par with last year. It now expects a fall in sales because of a decline in orders from corporate and regional jet operators.
First-half profits before tax rose from £33m to £59m while underlying profits before exceptional and non-trading items increased 11 per cent to £115m - the top end of analysts' forecasts. Aftermarket sales rose by 9 per cent to £1.3bn and now account for a half of total revenues. Deliveries of new civil engines now account for just 20 per cent of total sales.
Sir John Rose, Rolls' chief executive, said that for the first time in several years all of the group's divisions had made money, including its troubled energy division which supplies the industrial Trent engine.
Underlying profit in the civil aero-engine business slipped from £55m to £46m on sales of £1.2bn after a 14 per cent fall in first-half deliveries. Underlying profits in defence fell from £85m to £60m but the energy division turned a £30m loss last year into a £10m profit. The marine division, which includes Vickers, reported a slight increase in profits to £37m.Reuse content