Rolls Royce profits rise, sees flat 2014

LONDON – Britain's Rolls Royce forecast flat profits in 2014 due to declining defense aerospace and marine revenues before an expected return to growth in 2015.

 

Rolls, the world's second-largest aircraft engine maker behind US group General Electric, said the "pause" in revenue and profit growth would follow a strong performance in 2013 when it recorded profits at the upper end of expectations.

 

Rolls reported on Thursday 2013 underlying pretax profit of £1.76 billion ($2.92 billion), up from £1.43 billion in 2012, and towards the upper end of analyst forecasts which were between £1.36 billion and £1.89 billion, according to a Thomson Reuters survey of 19 analysts.

 

Underlying revenue rose 27 percent to £15.5 billion.

 

The strong performance in part reflects the contribution for the first time of the joint acquisition of Tognum – a German diesel engine maker Rolls-Royce acquired with Daimler in 2011.

 

"2013 was a year of good progress," Chief Executive John Rishton said. "In 2014, we expect a pause in our revenue and profit growth, reflecting offsetting trends across the business. This is a pause, not a change in direction, and growth will resume in 2015.

 

"Cash flow is expected to be broadly similar to 2013. Our record order book underpins our confidence in the long-term growth of our business."

 

Among the different divisions it said it expects a 15 to 20 percent fall in revenue and profit from Defence Aerospace, and a modest reduction in revenue but modest growth in profit from the Marine unit.

 

Its order book increased by 19 percent to £71.6 billion. The dividend was up by 13 percent to 22 pence per share. – Reuters