Rolls-Royce roars into the black with £4.9bn profit

Marco Green
March 7, 2018

It follows a record £4.6bn loss in 2016 when it was buffeted by sterling's collapse after the Brexit vote and a costly corruption scandal settlement.

The defence and aerospace company said revenue rose 9% in 2017 to GBP16.31 billion from GBP14.96 billion in 2016, as it swung to a pretax profit of GBP4.90 billion from a loss of GBP4.64 billion the year before.

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 nearly £1.1 billion in 2017.

Rolls-Royce has updated its forward estimates of revenues and costs across its long-term contracts, and has included a £148 million impact covering additional maintenance across the Trent 1000 and Trent 900 fleets, as well as increased customer support to "alleviate the impact of limited engine availability". The company said it took a GBP227 million charge from the issues in 2017. Underlying operating profits rose 34% to £520m. However, profits rose 61% to £330m as lower fixed costs helped boost margins.

For 2017, the final payment to shareholders was held at 7.1p, giving a full year payment of 11.7p.

Fro 2018, Rolls-Royce said it sees high single-digit underlying revenue growth for its Civil Aerospace and Power systems unit, with Defence stable, resulting in mid single-digit growth across the group.

Rolls-Royce said it has adopted the IFRS 15 accounting standard since the start of 2018.

According to aviation regulator, Directorate General of Civil Aviation (DGCA), India's domestic air traffic almost doubled to 117 million passengers in 2017 compared with 67 million in 2011, driven by a strong economy and low-fares and most airlines are pursuing expansion plans to support this rapid growth in passenger traffic.

The shares in Rolls Royce jumped around 10 per cent in early trading today after the British engine-maker reported a return to profit in 2017 and also pledged to deepen restructuring efforts. Financial results were ahead of our expectations and we achieved...

East has stripped costs out and simplified the business but still has more to do, announcing an expanded restructuring which will look to eliminate any remaining duplication in its management structures. He declined to say how many jobs will be affected, though the focus will be on white-collar staff rather than engineers and technicians.

But he added it was "embarking on a more fundamental restructuring programme", after announcing in January that it would slim its current five divisions down to three, and consider selling the bulk of its struggling marine business. Further details will be provided later this year.

Other reports by Click Lancashire

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