Rolls-Royce beats profits forecasts, maintains full-year guidance - UPDATE

26th Jul 2012 07:09

Underlying earnings at power systems group Rolls-Royce came in ahead of forecasts in the first half and is continuing to guide for 'good' growth for the full year.Underlying profit before tax rose by 7% from £595m to £637m,in the six months to June 30th, reflecting revenue growth, revenue mix, unit cost reduction and the contribution of Tognum. Analysts at Jefferies were expecting a figure closer to £608m.Underlying revenue increased by 5% from £5.46bn to £5.76bn, helped by 5% growth in underlying OE revenue (£2.72bn) and 6% growth in underlying services revenue (£3.04bn).OE sales growth included increased deliveries of Trent, V2500 and corporate engines in Civil Aerospace (up 26%) and of military transport and civil helicopter engines in Defence Aerospace (up 11%). However, growth was offset by a reduction in Marine (down 11%) and Energy (down 43%).Services revenue saw strong growth in Civil Aerospace and Defence Aerospace (both up 10%) and Energy saw a good growth. However, Marine was down 6% due to deferrals of maintenance activity by customers and lower spares spend.Jefferies said in a research note this morning: "We suppose that the more lacklustre results of the Marine and Energy divisions might take the gloss off things somewhat, but we believe it is clear that the macroeconomic backdrop is challenging. "The latter probably also explains why RR's guidance for FY12 is unchanged. We find it hard to take issue with that."The interim dividend per share was raised by 10% from 6.9p to 7.6p. Net cash at the end of the period stood at £869m, up from £223m the year before."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," said Chief Executive John Rishton.While the order book increased by 4% from £57.6bn to £60.1bn - helped by 4% growth to £49.4bn in Civil Aerospace and 44% growth to £3.9bn in Marine - the Defence Aerospace order book declined by 8% to £5.5bn as a result of budgetary pressures on its major customers in Europe and North America. The Energy order book also fell by 7% to £1.3bn."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," Rishton said.By 15:38 on Thursday afternoon, shares in Rolls-Royce had jumped 6.99% to 887.5p, one of the best performing stocks on the Footsie.BC