OREANDA-NEWS. Warren East, Chief Executive, said: “Despite the disappointment of our recent update, our second half outlook remains positive and full-year guidance for revenue, profit and cash issued on July 6th remains unchanged. 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.”

Group Highlights*

  • Order book up ?2.8bn to ?76.5bn
  • Underlying revenue down 3% to ?6.3bn (H1 2014: ?6.5bn)
  • Underlying profit before tax down 32% to ?439m (H1 2014: ?646m)
  • Return on sales** down 3.2 percentage points to 7.3%, largely reflecting 2015 revenue mix and a higher R&D charge
  • Payment to shareholders of 9.27p per share, up 3%

Aerospace

  • Secured the largest ever order to provide Trent 900 engines and TotalCare® service support to Emirates, helping grow the Civil Aerospace order book to ?66.4bn, up 5% on 2014 year end
  • Underlying revenue up 2% to ?4.3bn (H1 2014: ?4.2bn)
  • Underlying profit before financing charges and tax down 27% to ?432m (H1 2014: ?593m)
  • Lower demand for Airbus A330ceo creates H2 2015 and 2016 headwinds for Trent 700 deliveries

Land & Sea*

  • Improved second quarter performance from Power Systems offset weaker start to the year while weaker Marine held back overall results
  • Underlying revenue down 12% to ?2.0bn (H1 2014: ?2.3bn)
  • Underlying profit before financing charges and tax down 56% to ?48m (H1 2014: ?109m)
  • Weakness in offshore markets expected to hold back full year 2015 and 2016 Marine performance
 

Reported

Underlying

Six months to 30 June

2014*

2015

Change

2014*

2015

Change
Revenue (?m) 6,249 6,370 +2% 6,451 6,256 -3%
Profit before tax (?m) 713 310 -57% 646 439 -32%
Earnings per share (p) 28.85 19.51 -32% 25.69 18.27 -29%
Net funds (?m)***       666 (643) (1,309)
Free cash flow (?m)****       (347) (576) (229)

Underlying: for definition, see note 2 on page 24; * Re-presented to exclude Energy as a discontinued operation; ** By reference to underlying profit before finance charges and tax; *** 2014 H1 Net funds figures are 2014 year-end; **** Free cash flow defined as operating cash after capital expenditure, pensions and taxes, before payments to shareholders, FX and acquisitions & disposals. For details see: http://www.rolls-royce.com/investors/financial_results

Commenting on the outlook, Warren East, Chief Executive, added: “In the near term, we are managing a significant transition from mature engines to newer, more fuel efficient ones, such as the Trent XWB, Trent 7000 and Trent 1000. At the same time, we are taking appropriate actions to mitigate the effects of weakness in our offshore marine markets.

“While these create a profit headwind in the near term, it is critical we successfully deliver our product launches, complete our supply chain transformation and sustain investment in our businesses to strengthen their competitive positions. The initial phase of my ongoing operational review has and will continue to concentrate on how we drive improvements and sharpen our focus to make us a more resilient and sustainable business.”