Rolls’ shares close to record after securing Navy and Japan Airlines deals

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ROLLS-ROYCE hailed deals to work on the next generation of Royal Navy warships and power new Japan Airlines planes as it remains on track for strong annual profits growth.

Shares in the engines company surged more than three per cent as Rolls said stronger trading in defence aerospace has helped offset weaker trading in marine.

That will mean “good” underlying profits growth for 2013, plus “modest” sales growth, pushing its shares close to their record high in July.

Rolls recently won a deal to design a propulsion system for the Navy’s Type 26 global combat ship, which are due to go into service from 2021 onwards.

Rolls said 5,400-tonne vessels will feature the “world’s most powerful marine gas turbine”, its MT30. Rolls will work with main contractor BAE Systems and Tognum, its joint venture collaboration with Daimler, to design the system.

The warships are due to be built in Glasgow after BAE’s controversial decision to end shipbuilding at Portsmouth, which will cost about 1,800 jobs at BAE.

A final decision on the Type 26 contracts is thought to hinge on the outcome of the Scottish referendum over independ- ence.

Rolls said it will be boosted by Japan Airlines’ order for 31 Airbus A350 XWB aircraft, which are powered by its Trent XWB engines.

It also struck a recent £933m deal with Lufthansa to supply Trent XWB engines to power 25 Airbus A350-900 aircraft, including a support package.

Rolls added it has signed multiple contracts worth more than £373m with various American government departments, despite delays in spending by the administration.

The group said it now expects its defence aerospace arm to show modest growth, up from broadly flat, but downgraded earnings in its marine division to broadly flat from previous expectations for an increase.

Underlying pre-tax profits leapt 34 per cent to £840m during the first six months of the year, lifted by more work and restructur- ing.

It reported 24 per cent profits growth to £1.4bn in 2012.

Rolls said its new state-of-the-art Advanced Blade Casting Facility in Rotherham is on schedule to produce its first blades in late 2014.

The new facility will manufacture high technology single crystal turbine blades for large civil aero engines and will create 150 jobs.

Rolls said the facility will use cutting edge manufacturing techniques to produce the blades, which play a critical role in jet engines and must withstand incredibly harsh conditions.

Business Secretary Vince Cable said the new facility is further evidence of Rolls’ strong commitment to the UK.