Engine giant on a roll with record £1bn profit

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Engines giant Rolls-Royce posted record annual profits of more than £1bn yesterday and said it is confident of further growth this year.

Derby and Bristol-based Rolls has been lifted by an order book that stood at £62.2bn at the end of 2011, fuelled by demand in civil aerospace.

Unveiling profits of £1.16bn and revenues of £11.3bn, chief executive John Rishton said the business performed well in 2011.

He added: “Our order book gives us good visibility of future revenues and demonstrates the confidence our customers have in us.”

A year ago, the company’s results were blighted by the £56m impact of the mid-air failure of one of its Trent 900 engines on a Qantas superjumbo.

However, the civil aerospace division appears to have weathered the storm after its order book grew by 7 per cent to £51.9bn, a workload which includes more than 5,000 engines. Profits in the division increased by 27 per cent to £499m due to higher volumes and improved productivity.

Rolls expects the operation to produce further strong profits growth this year, alongside more modest improvements in its defence, marine and energy arms.

The pressure on Government budgets meant the order book in defence fell by 7 per cent to £6bn but Rolls said the £1.8bn of new business achieved in the year demonstrated there were still opportunities for growth.

Rolls completed one of the biggest deals in its history last year when it joined forces with Mercedes-Benz owner Daimler to acquire German engine maker Tognum for around £3bn.

The UK company will combine Tognum with its own Bergen business, which makes engines used across the maritime and power generation sectors.

The profits figure of £1.16bn represented an increase of 21 per cent on a year earlier.

Shareholders will receive a full-year dividend of 17.5p a share, an rise of 9 per cent on a year ear-lier.

The order book for the marine business declined 8 per cent but Rolls said new business secured during the year improved 15 per cent to £2.1bn and provided some evidence of recovering demand. Profits were 3 per cent lower at £323m.

Strong demand in the oil and gas industry meant the order book for turbines in the energy sector increased 28 per cent to £1.5bn.