Aug 12, 2015
Rolls-Royce Holdings reported underlying profit before tax of £439 million ($684.3 million) for the first half, down 32% year-over-year, on underlying revenues of £6.3 billion, down 3%.
The UK-based engine manufacturer had warned last month that profits were likely to be down, due to a combination of its aerospace division transitioning to a new generation of Trent engines and continuing weakness in its marine business.
“Despite the disappointment of our recent update, our second-half outlook remains positive and full-year guidance for revenue, profit and cash issued July 6 remains unchanged,” new CEO Warren East said.
“The continued growth in our order book demonstrates the long-term demand for our innovative products and services, and underpins my confidence in the fundamental strength of our business.”
The Group’s order book for the first half was £76.5 billion, up £2.8 billion on the same period last year.
The aerospace division recorded a 2% rise in underlying revenue to £4.3 billion, but underlying profit before tax and charges dropped 27% to £432 million.
The company reiterated its comments from last month that “recent changes in demand and pricing for our Trent 700 program, combined with the reduced demand for our business jet engines and a softer regional aftermarket, are expected to create a £300m net Civil Aerospace profit headwind into 2016.”
Looking further ahead, it said the successful roll-out of new engines, such as the Trent XWB, 1000 and 7000, together with a growing aftermarket, is expected to drive “significant revenue growth” over the next 10 years as the Derby-based powerplant manufacturer builds toward a 50% plus share of the installed widebody passenger market.
“In the near term, we are managing a significant transition from mature engines to newer, more fuel-efficient ones,” East said. This means that mature, more profitable powerplants such as the Trent 700 are now peaking or are in decline; newer programs typically see lower pricing for launch customers and higher initial costs.
Source: ATWOnline.com