Demand for efficient engines boosts Rolls

By RHYS JONES
Published on 27/07/2012 00:00

ENGINEERING firm Rolls-Royce posted a better-than-expected rise in first-half profit, driven by increased production at planemakers Airbus and Boeing, which are responding to growing demand from airlines for fuel-efficient planes.

Rolls, the world’s second-largest maker of aircraft engines behind American rival General Electric, reported an underlying pre-tax profit of £637 million for the six months to 30 June, beating analysts’ forecasts for a £615m surplus. The rise came on the back of a 5 per cent increase in revenues to £5.8 billion.

Europe’s Airbus and American peer Boeing are ramping up output and are targeting more than 1,100 deliveries this year.

Rolls raised its interim dividend by 10 per cent to 7.6p and said it expected to deliver further growth in 2012 in spite of global economic uncertainty.

Chief executive John Rishton said: “For the full year, we continue to expect good growth in underlying profit with cash flow around breakeven.

“The volatility of the economic environment – whether it’s in Europe, a slowdown in China or the United States – does have an impact and none of us are immune to this. But our diverse range of products and the geographic spread we have helps protect us.”

The group sells airline, defence, marine and energy products to firms and governments in more than 100 countries.

RBC analyst Rob Stallard said: “We view these as positive results in the key aerospace area, which for us remains the major driver of the stock.”