Rolls-Royce group half-year highlights
- Order book of £60.1Bn, up 4%.
- Underlying revenue of £5.8Bn, up 5%.
- Underlying profit before tax of £637M, up 7%.
- First half payment to shareholders of 7.6 pence per share, up 10%.
- Completion of sale of share holding in International Aero Engines AG (IAE).
- Full year Group guidance confirmed.
Chief executive, John Rishton, said: “Rolls-Royce has delivered solid growth in underlying revenue and underlying profit in the first half of the year.
“We continue to invest to support future growth, including our new production facility in Singapore, a new turbine blade casting plant in the UK, a new stator facility in the USA and a new assembly plant for our Energy business in Brazil.
“For the full year, we continue to expect good growth in underlying profit with cash flow around breakeven, excluding the positive impact of the Tognum acquisition and the sale of our equity stake in IAE.”
Group overview statement:
In the first half of the year, underlying revenue increased by 5% and underlying profit by 7%. We continue to invest in technology, infrastructure and people. These investments will enable us to meet our customer commitments and improve efficiency.
This programme of investment continued in the first half:
- We opened our new state-of-the-art facilities in Singapore, where we will manufacture wide-chord fan blades and assemble large civil engines for the first time outside the UK. We will be producing engines later in 2012 and will be at full production capability by the end of 2013.
- We are building a new casting facility at Rotherham in the UK that will have capacity to produce 100,000 turbine blades a year.
- A new advanced manufacturing facility at Indianapolis will produce compressor banded stators for our Civil Aerospace business.
- At Santa Cruz in Brazil work has started on a new assembly plant for our Energy business.
- We began building a new nuclear reactor core factory at Derby in the UK as part of a £1Bn contract with the Ministry of Defence to support the UK’s nuclear powered submarine fleet.
- Construction has begun on a new Heathrow Services Centre. This will expand the scale and capability of the services operations for our growing Civil Aerospace customer base at London Heathrow.
- We announced an expansion programme of our global network of Authorised Maintenance Centres (AMCs) for our Defence Aerospace customers. These AMCs will enhance our capacity to provide repair and overhaul services for the installed base of T56 engines that power military transport aircraft such as the C-130 Hercules and the P3 Orion.
- We announced our intention to acquire Aero Engine Controls (“AEC”), a joint venture with Goodrich Corporation. The transaction will give us full ownership of a critical capability that enhances jet engine performance.
The status of two major transactions is as follows:
1. Sale of IAE Share Holding
The sale to Pratt & Whitney of our 32.5% share holding in IAE completed for a consideration of $1.5Bn, subject to working capital adjustments. We remain an essential supplier to IAE and will benefit from a revenue stream from the current installed fleet of V2500-powered aircraft for the next 15 years. Rolls-Royce remains committed to the mid-size aircraft market, to IAE and to its customers and will continue to be responsible for the manufacture of high-pressure compressors, fan blades and discs as well as the provision of engineering support and final assembly of 50% of V2500 engines.
Our long and successful partnership with Pratt & Whitney will continue through a new venture to be established, subject to regulatory approval, to develop engines for the next generation of mid-size aircraft. The other IAE partners, Japanese Aero Engines Corporation (JAEC) and MTU Aero Engines GmbH (MTU), have also agreed to join this new venture.
2. Acquisition of Tognum AG
Engine Holding GmbH, our 50:50 joint venture with Daimler, owns over 99% of shares in Tognum. The German legal process to acquire the remaining shares is now expected to be completed in the first half of 2013. The Group will therefore equity account Tognum for 2012 and fully consolidate it upon completion.