Rolls-Royce posts 4% rise in profits

Feb 12 2010 by Peter McCusker, The Journal

ROLLS-Royce said profits rose 4% last year despite economic turbulence and continued delays in a number of major aircraft programmes.

The civil aerospace and defence firm said success in winning new customers and orders, as well as its ongoing focus on costs, meant underlying profits improved to £915m in 2009. Revenues increased 14% to £10.4bn.

It expects trading conditions to remain challenging this year but said it was confident of matching last year’s revenues and profits.

Chief executive Sir John Rose said: “Rolls-Royce has delivered a solid set of results despite difficult trading conditions.” The company’s order book stood at £58.3bn at the end of the year after new business intake of £13.4bn during 2009.

This included growth in the civil aerospace division’s order book to £47bn after new orders totalling £9.4bn in the year.

However, volatile trading conditions and the continuing effects of major programme delays impacted on profits, which fell to £493m from £566m a year earlier.

Huge oil price rises in 2008 have been blamed for the delayed take-up of Airbus A380 and Boeing 787 widebody programmes in the year.

Revenues generated from outside civil aerospace continued to grow strongly and comprised 56% of revenues in 2009. This was driven by increases of 19% and 17% respectively in its defence and marine segments. Rolls shares rose more than 3% yesterday.

Keith Bowman, an equity analyst at Hargreaves Lansdown stockbrokers, said underlying profits had been expected to show a slight fall.

“Management’s focus on building recurring service revenues continues to flourish, while confidence for the outlook is being expressed via a 5% increase in the dividend payment.

However, he added: “Along with the currently heightened volatile nature of the civil aerospace business, uncertainties over the impact of potential defence spending cuts remain in the background.”

Earlier this week the company announced it was building a new aerospace disc factory in Washington to replace its existing plant in Sunderland.