Rise in large air engine deliveries helps Rolls-Royce to £1.94bn profit
Rolls-Royce has taken a step forward in its recovery after a jump in large engine deliveries helped the firm swing to a half-year profit.
The aircraft engine giant booked a pre-tax profit of £1.94 billion for the six months ending in June, up from a £2.15 billion loss over the same period last year.
Revenues climbed 12% to £7.57 billion, as the FTSE 100 firm cheered a 27% rise in large engine deliveries in the civil aerospace sector.
The company has been looking to shore up its performance after reporting its largest ever loss and one of the biggest in UK corporate history earlier this year, slumping into the red with a pre-tax loss of £4.64 billion for 2016 after a £4.4 billion writedown caused by the collapse of the pound since the Brexit vote, as well as a £671 million penalty to settle bribery allegations.
Chief executive Warren East said restructuring savings were ahead of schedule and it was on track to hit its profit targets.
He said: "Rolls-Royce delivered encouraging year-on-year operational progress in the first six months of the year.
"Civil Aerospace large engine deliveries increased 27% and we made good further progress improving Trent XWB OE economics.
"Together with a higher-than-expected benefit from long-term contract accounting adjustments, this resulted in a good set of results, with financial performance ahead of our expectations for the first half.
"Looking to the balance of the year, execution and delivery of a number of important milestones across our businesses will be key to achieving our full year expectations. Our outlook for full-year profit and cash remains unchanged."
On an underlying basis, half-year pre-tax profits rose by £183 million to £287 million over the period.
The civil aerospace business was the stand-out performance, with half-year revenues rising 14% to £3.68 billion, helping to offset a 4% drop in defence aerospace to £1.05 billion.
Its nuclear arm also recorded a solid performance, with revenues rising 8% to £391 million for the half-year.
It said research and development spending rose to £411 million over the six-month period, up from £378 million last year.
Mr East added: "Two years ago we set out a programme of change at Rolls-Royce to drive efficiency and sharpen our focus on execution.
"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.
"Strong execution and a focus on delivering our customer commitments remains essential as we continue to manage in-service issues in Civil Aerospace alongside key new product introductions and increased production volumes."
The company revealed in June that it would safeguard more than 7,000 jobs by making its biggest single investment in the UK in over a decade.
The move will see it drive £150 million over the next few years into new and existing civil aerospace facilities across the East Midlands, including creating a new facility at its historic site in Derby for the testing of large civil aero engines.