Rolls Royce Revenues Up, But Profit Hit By Financing Costs

29th Jul 2010 07:24

By Steve McGrath Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. aircraft engine manufacturer Rolls-Royce Group PLC (RR.LN) Thursday said it expects profits before financing costs to rise moderately this year due to cost-cutting and a strong performance from its marine business. Rolls-Royce, the world's second-largest maker of commercial and military jet engines after General Electric Co. (GE), reported higher revenues and flat pretax profit before financing costs in the first half. Its order book was steady at GBP58.4 billion from GBP58.3 billion a year ago. Profit excluding certain financial items, the preferred measure of the company's operational performance, in the six-month period to June 30 rose to GBP594 million from GBP593 million a year ago. Revenue rose 5.4% to GBP5.42 billion from GBP5.14 billion. It posted a net loss of GBP334 million compared with a GBP1.86 billion profit a year ago as financing costs rose sharply. The company increased its interim dividend by 6.7% to 6.40 pence a share. In addition to aircraft engines, the company makes electric propulsion systems for the shipping industry, gas turbine engines and automation and control systems for the energy sector and instrumentation and control systems for the nuclear industry. Its business proved resilient during the global economic downturn and it continues to benefit from long-term contracts to service the engines it provides to airlines and the military. However, cuts in defense spending on both sides of the Atlantic could hurt suppliers of military equipment. Still, its shares have gained 23% in value since the start of the year. They closed Wednesday at 588 pence. Wednesday, the company got a GBP200 million order to supply engines to Hawk trainer jets the Indian military is buying from BAE Systems PLC (BA.LN). It also won $1.7 billion of orders during last week's Farnborough International Air Show, including orders worth more than $1 billion for its Trent 700 engines to power Airbus commercial airliners bought by Russia's Aeroflot and Indonesia's Garuda. -By Steve McGrath, Dow Jones Newswires; 44-20-7842-9284; [email protected] (END) Dow Jones Newswires July 29, 2010 02:24 ET (06:24 GMT)