Pick up in Defence markets lifts growth expectations for Rolls-Royce
ROLLS-ROYCE has said a pick up in the Defence Aerospace sector is likely to mean modest growth in its full year underlying revenue and good growth in underlying profit.
However, the company said the same could not be true for its Marine segment where forecasts are now for a flat performance rather than earlier predictions of modest growth.
“For the full year, the group continues to expect modest growth in underlying revenue and good growth in underlying profit, with cash flow around breakeven,” it said in an interim management statement.
“In Defence Aerospace we have changed our guidance for underlying profit from broadly flat to modest growth, and in Marine, we have changed our guidance for underlying profit from modest growth to broadly flat.”
It said its German acquisition, Tognum, was continuing to trade in line with expectations.
Since its half year results in July, the company said it had achieved some important milestones.
In Civil Aerospace, Japan Airlines ordered 31 Airbus A350 XWB aircraft, which are powered by Trent XWB engines. Lufthansa selected Trent XWB engines worth $1.5bn, including TotalCare® service support, to power 25 Airbus A350-900 aircraft. Trent 1000 engines powered the successful first test flight of the Boeing 787-9, the second member of Boeing’s 787 Dreamliner family. And, because of the current regulatory environment, it agreed with United Technologies Corp. not to proceed with its intention to form a new joint venture to develop an engine to power future mid-size aircraft (120-230 passenger aircraft).
“We remain fully committed to this important market segment and will continue to invest in technologies that will enable us to take advantage of opportunities as they arise,” it added.
In Defence Aerospace, it signed multiple contracts worth over $600m to provide and service military engines for various US government departments. It also completed the sale of its 50% shareholding and interest in the RTM322 helicopter engine programme to Turbomeca, for which it received €293m.
In Marine and Power Systems, it was selected to design the propulsion system for the Royal Navy’s future Type 26 Global Combat Ship. Subject to contract, this system will feature the world’s most powerful marine gas turbine, the Rolls-Royce MT30 in combination with Tognum MTU diesel gensets and Series 4000 engines.
In Power Systems, Tognum announced that it would expand its Research and Development Centre at the MTU Aiken Plant. The investment will double the centre’s development capacity with the addition of two new test cells for off-highway diesel engines.
The company has also announced the appointment of Lee Hsien Yang, a Special Advisor of General Atlantic, as non-executive director. He will join the board in January, 2014. He will be joined by Warren East, former Chief Executive of ARM Holdings.
Rolls-Royce will report the group’s preliminary results for the financial year ending December 31, 2013 on February 13, 2014.
