Engine maker Rolls-Royce powers back into profit
Rolls-Royce roared back into net profit in 2017, largely as the sterling recovered, the company announced on 7 March.
Profit after tax struck £4.2 billion in 2017 following a net loss of £4 billion in 2016, Rolls said in an earnings statement.
While the plunge in the value of the pound in the wake of Britain's 2016 vote in favour of Brexit helped many exporters, Rolls-Royce was forced to book a charge of £4.4 billion that year as it had not hedged against such a move.
The firm's hedge book showed a gain of £2.6 billion in 2017.
Stripping out exceptional gains and losses for Rolls during the past two years on foreign exchange factors, the company on 7 March added that underlying pre-tax profit jumped by a quarter to almost £1.1 billion in 2017.
Connor Campbell, analyst at Spreadex trading group, said: ‘Investors cheered a 25% increase in full year underlying pre-tax profit... and a 6% jump in reported revenue.
‘CEO Warren East's commitment to a "more fundamental restructuring programme" set to deliver ‘a significant reduction in costs’ also helped.’
Pointing to the underlying performance, Rolls chief executive East said the group was ‘encouraged by the improving financial performance in 2017 with growing revenues contributing to improved profitability and cash generation.’
East is steering a vast restructuring programme at the group, slashing thousands of jobs since his appointment in 2015.
In January 2018, the company announced plans fora possible sale of its commercial marine business.
East said: ‘The business unit simplification and restructuring programme that we announced this January will drive further rationalisation and is a fundamental step in the journey started two years ago to bring Rolls-Royce closer to its full potential both operationally and financially.’
Looking ahead, Rolls said it would take a hit of around £340 million during 2018 on repairs to Trent engines used by the Boeing 787 Dreamliner and Airbus A380 superjumbos.
Rolls has experienced issues with some engine parts not lasting as long as expected, requiring the company to remove turbines for repairs, in turn causing disruption for customers.
East said that Rolls would continue ‘to address the in-service engine issues... the estimated costs of which are significant.’
More from Defence Notes
-
RUSI deputy: UK needs longer procurement plans and improved awareness of US sift to Indo-Pacific
The UK budget announced in Parliament on 30 October was the first by a Labour government in 14 years which has also launched a review into defence procurement programmes.
-
Australia outlines longer punch and brings local industry onboard
The Australian government has placed a focus on Guided Weapons and Explosive Ordnance (GWEO) which has included the purchase of additional long-range rocket systems and investments in local production of missiles.
-
UK boosts defence budget by 5.3%, but is this enough?
The UK budget announced in Parliament on 30 October is the first by a Labour government in 14 years. While it sees a boost in defence spending, this comes in the face of fiscal challenges and the effects of inflation.
-
UK makes big moves to fix “broken” defence procurement system ahead of major review
The changes are intended to meet greater need and deliver more value for money.
-
US companies invest in production capabilities to satisfy DoD’s hunger for cutting-edge capabilities
BAE Systems, Booz Allen Hamilton and Lockheed Martin have been betting on new facilities and innovative manufacturing technologies to speed up the development of new solutions.
-
Just Released: Military Training Technology Report October 2024 now available to read
How the latest portable simulation solutions can deliver JTAC training wherever it is needed