Rolls-Royce enjoys strong growth in second half of year
Underlying revenue increased eight per cent to Â£12.2bn, including 12 per cent growth in underlying OE revenue (Â£5.9bn) and five per cent growth in underlying services revenue (Â£6.3bn).
Underlying OE revenue growth included a 23 per cent increase in deliveries of Trent and corporate engines in Civil Aerospace and a six per cent increase in military transport, combat, UAV and civil helicopter engines in Defence Aerospace. Growth was offset by the reduction in OE revenue in Marine (down three per cent), and in Energy and in Bergen's contribution to EH (both down 35 per cent).
Underlying services revenue growth included an increase of five per cent in Civil Aerospace, in line with growth in the installed base, and five per cent in Defence Aerospace. Energy and EH also saw good growth. Marine was up one per cent reflecting increased maintenance activity by customers and higher spares spend in the second half.
Underlying profit before tax increased 24 per cent to Â£1.4bn, reflecting revenue growth, improved revenue mix, unit cost reduction and net trading contributions of Â£77m from Tognum and Â£92m related to the IAE restructuring. These benefits were partially offset in Civil Aerospace by higher R&D charges and lower entry fees associated with major new programmes, and in Defence Aerospace by the non recurrence of the Â£60m Strategic Defence Security Review (SDSR) settlement. Underlying earnings per share (UEPS) improved 22 per cent.
The year-end cash position was Â£1.3bn (Â£223m in 2011) includes the contributions of Â£942m for IAE and Â£167m for Bergen. The average net debt in 2012 of Â£145m (average net cash of Â£320m in 2011) reflects the timing of the acquisition of Tognum in 2011 and the sale of our interest in IAE in 2012. Excluding the effects of acquisitions and disposals, average net cash of Â£725m in 2012 compared with Â£805m in 2011.
There was a cash inflow of Â£1.1bn during 2012 included Â£942m from the disposal of IAE and Â£167m for the contribution of Bergen to EH. Excluding acquisitions, disposals and foreign exchange, the inflow of Â£137m reflects the continued investment programme in future growth and the increase in net working capital required ahead of OE volume growth, predominantly in Civil Aerospace.
John Rishton, CEO, said: "In the second half of the year, revenue growth increased as we delivered 23 per cent more engines than in the first half. Margins improved, reflecting volume, mix, cost control and the IAE transaction.
"In the full year, underlying profits increased for the tenth consecutive year. We have established this record of consistent delivery while continuing to invest in people, technology and facilities.
"The strength of our order book demonstrates the confidence our customers have in our products and services. Our priorities remain: delivering on the promises we have made; deciding where to grow and where not to; and improving financial performance.
"In 2013, we expect modest growth in underlying revenue and good growth in underlying profit with cash flow around break even as we continue to invest for the future.
"Sir Simon Robertson today announced his intention to retire as Chairman of Rolls-Royce at this year's Annual General Meeting. Simon has made an exceptional contribution over the past eight years. He has worked tirelessly on behalf of the company and his energy and enthusiasm have been an example to us all. I am delighted to welcome Ian Davis as our new Chairman and look forward to working closely with him".
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