Rolls-Royce shares in a turnaround lift-off
SHARES in Rolls-Royce soared to their highest in more than two years yesterday as the aircraft engine-maker’s half-year profits more than doubled.
A 27 per cent jump in Trent engine deliveries and higher maintenance revenue was backed up by faster-than-expected restructuring savings as it continued its recovery from a string of profit warnings. Its shares climbed 91p to 979p. Rolls, which recently announced its biggest single investment in the UK for more than a decade, £150million on new and existing civil aerospace facilities, posted an underlying pre-tax profit of £287million, up from £104 million last year, on 6 per cent higher revenue of £6.86 billion.
Success
The maker of engines for Boeing and Airbus has been stripping out layers of bureaucracy to speed up decision-making and achieve annual cost savings of £200 million.
The overhaul was launched by chief executive Warren East, the former boss of chip designer Arm Holdings, who was brought in two years ago to revive the engineering giant’s fortunes.
He said: “Our strengthened management team is making good progress in simplifying the organisation and driving the pace of necessary change to develop a more resilient and sustainable business.
“However, this is no time for complacency. Our long-held commitment of investing in research and development and future technologies remains unchanged as we look to secure the long-term success of the business.”
Rolls is doubling production of its large civil aircraft engines with the aim of capturing half the market by 2020.
First-half R&D spending increased by £33 million to £411 million, while revenues in its defence aerospace and marine businesses fell by 4 per cent and 15 per cent.
Aerospace analyst Howard Wheeldon said: “There is still a long way to go yet, but neither should anyone ignore the evidence of strong signs of progress within these first-half results.”