Rolls-Royce grabs top slot for engines
Friday 11 February 2005
Unveiling a better-than-expected 21 per cent rise in annual profits to pounds 345m, Rolls said that it took 40 per cent of all engine orders placed by commercial airlines in 2004, compared with 34 per cent for GE and just 10 per cent for the other US engine manufacturer Pratt & Whitney.
This is the first time that Rolls' share of the civil market has hit 40 per cent, although it has accounted for 50 per cent of all engines used to power wide-bodied jets such as the Boeing 777 and Airbus A330 for some time.
Sir John Rose, Rolls' chief executive, said that 2004 had been a good year on all levels. However, he added that GE was still bigger in terms of engine deliveries and Rolls would have to outsell its American rival consistently for several years before it could truly claim market leadership.
Order intake reached a record pounds 8.7bn last year, taking the total order book at the end of the year to pounds 18.9bn. But the real driver behind the surge in profits was the increase in the proportion of sales accounted for by the company's lucrative spares business.
Aftermarket sales grew by 12 per cent to pounds 3.8bn - equivalent to 55 per cent of total group revenues. In the civil engine side of the business, spares accounted for an even higher 59 per cent of income.
Although civil engine deliveries are still well down on the record 1,300 achieved in 2001, Sir John said they had begun to recover a year ahead of expectations. Deliveries rose to 824 last year, compared with 746 in the trough year of 2003, and Rolls expects a further increase in production this year.
The company is on the two big new civil airliner programmes - the Airbus A380 super-jumbo, where it has so far taken 50 per cent of the market, and the Boeing 787, where it is the engine supplier for the launch customer All Nippon Airways. Rolls will also offer its Trent engine on the A350, the new medium-sized Airbus jet.
The military engine division was boosted last year by a pounds 750m order for EJ200 engines following the confirmation of a second tranche of orders for the Eurofighter Typhoon.
The shares fell 7p, or 2.6 per cent, as dealers took profits and some analysts expressed disappointment that Rolls had not lifted the dividend, which remains at 8.18p for the year.
But Sir John pointed out that Rolls had never cut the payout, even when it hit trouble in 2002 and was forced to slash jobs and warn on profits in the aftermath of the terrorist attacks of 11 September 2001.
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