Rolls-Royce sticks to guidance thanks to engine delivery boost
ROLLS-ROYCE REPORTED an 80 per cent drop in first half profit, but stuck to guidance that its profit performance will recover in the second half of the year.
Rolls-Royce, which is in turnaround mode after warning last year that 2016 profit would halve, reported an underlying pre-tax profit of £104m for the first six months of the year, beating a consensus forecast for it to be £16m in the red.
The company said its outlook for the full year is unchanged, driven by a pick-up in large aeroengine deliveries, growth in demand for engine servicing and as it benefits from a cost-cutting programme.
Analysts expect it to post pretax profit of £669m in 2016.
Warren East, chief executive of Rolls Royce, said: “Order intake has been good and, although known headwinds constrained revenue and profit in the first half, the business remains well positioned to deliver a solid second half performance.”
Following the EU referendum, Rolls-Royce reaffirmed its commitment to the UK but warned that longer term assurances will depend on the post-Brexit deal.
Rolls-Royce is involved with The Advanced Manufacturing Research Centre (AMRC) in South Yorkshire, which is managed by the University of Sheffield.
George Salmon, analyst at Hargreaves Lansdown, said sometimes “just meeting expectations is good enough and that has proved the case today with Rolls”.