Rolls lifted by demand for its fuel-efficient engines

JET engine giant Rolls-Royce reported its tenth consecutive year of growing profits, boosted by demand for fuel-efficient engines.

Rolls said its order book grew four per cent to £60.1bn, while underlying pre-tax profits were up 24 per cent to £1.4bn in 2012.

Rolls’ underlying sales grew eight per cent to £12.2bn.

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Revenues at its civil aerospace business, which accounts for around half of group sales, rose 16 per cent, helped by soaring demand for more fuel-efficient engines for planes made by Europe’s Airbus and US rival Boeing.

Rolls delivered 668 engines in 2012, up 23 per cent on 544 deliveries a year earlier. Profits at the division grew 46 per cent to £727m.

The world’s second-biggest maker of aircraft engines behind US firm General Electric said it did not expect the grounding of Boeing’s Dreamliner jet to dent profits.

Rolls, which makes the Trent 1000 engines that power some Dreamliners, said last month’s worldwide grounding of the 50 jets in commercial service would not hit its profits.

“Boeing continues production so no, it won’t impact us, and I’m confident Boeing will sort the problems out soon,” said chief executive John Rishton.

“For the full year 2013, we expect the group to see good growth in underlying profit.”

Its £16.1bn order intake included £10.3bn of new orders for civil aerospace, £1.6bn in defence aerospace, £3.3bn in marine and £0.8bn in energy.

Rolls, which dates back to 1884, said revenues were boosted by a strong performance at Tognum, its marine and industrial engine joint venture with Daimler.

This year it expects modest revenue growth and strong profit growth in civil aerospace. In defence aerospace, it expects to see modest revenue growth but shrinking profits. Marine and energy should both grow sales and earnings modestly.

The group’s energy business saw its order book shrink nine per cent to £1.3bn.

“While the power generation market in mature economies remains suppressed, we are seeing growth in developing markets,” said the company. “We continue to invest for future growth in civil nuclear.”

Britain’s new nuclear plans were dealt a blow recently when Centrica withdrew from a partnership with EDF to build the first of the fleet of nuclear power stations in Somerset at Hinkley point. EDF is now looking for a new partner.

Rolls is part of the 8,000 sq m Nuclear Advanced Manufacturing Research Centre in South Yorkshire, based at the Advanced Manufacturing Park on the border of Sheffield and Rotherham.

The Nuclear AMRC, on the site of a former colliery, is a collaboration between the Universities of Sheffield and Manchester.

Rolls plans to build a factory at the park to make components for Britain’s new fleet of nuclear power stations, after striking a £400m deal with French energy giant Areva.

It also has a deal with Hitachi, which owns the Horizon new nuclear venture, to develop nuclear reactors.

The planned new factory is dubbed Project PoWeR, and is expected to be a 19,400 sq m building. Rolls has bought the land and has planning permission for the site, but has yet to start building.

“We are still developing our plans,” said a Rolls-Royce spokesman.

Rolls is also investing £80m in a futuristic factory nearby to manufacture high-technology turbine blades for jet engines.

The Advanced Blade Casting Facility will create at least 150 jobs.

The plant will make single crystal turbine blades which can operate at higher temperatures and enable engines to be more fuel efficient, plus allow turbine blades to last longer and so reduce engine maintenance costs.

Investec Securities analysts said they were “rock solid results”.