12th Dec 2018 08:33
LONDON (Alliance News) - Rolls-Royce Holdings PLC on Wednesday confirmed its annual guidance and said it expects a sharp increase in its engine production and delivery volumes in 2019.
The jet engine manufacturer said it expects its operating profit for 2018 to be in the upper half of its GBP300 million to GBP500 million prior guidance. In 2017, operating profit was GBP321 million.
The estimates exclude Industria de Turbo Propulsores SA, acquired by Rolls Royce in December last year.
On a divisional basis, Rolls-Royce said it expects Civil Aerospace growth to be in the mid-teens range. The company said it now intends to deliver 500 large engines to its customers in 2018, down from its March engine projection of 550 large engines.
This reflects supply chain challenges that are affecting the whole civil aero engine sector, it said, and also early stage production ramp-up challenges on Rolls Royce's new Trent 7000 engine. The Trent 7000 engine is used in the Airbus A330neo passenger aircraft.
On Wednesday, the company said that despite significantly increasing Trent 1000-related maintenance, repair and overhaul capacity over the last twelve months, the number of aircraft on ground remained at a high level.
Looking ahead, Rolls Royce expressed confidence that Trent 7000 production and delivery volumes will increase "significantly" in 2019.
In the Power Systems division, order intake has been strong with a number of key orders secured in the second half, Rolls Royce said.
Trading progress in the Defence unit has remained in line with the company's full year guidance, it said, with revenue expected to remain stable. Rolls Royce said it secured an "important" order in the second half for its AE 3007 engines, being selected by Boeing to power the US Navy's new MQ-25 Stingray aircraft.
In addition, Rolls Royce noted that sale of its Commercial Marine business is proceeding to plan, and it expects completion towards the end of the first quarter of 2019.
Meanwhile, the restructuring, announced in mid-June, remains on track, Rolls Royce noted. The company said it focused in 2018 on establishing its new operating model and on delivering the targets. In the next two years, the company expects a 4,600 headcount reduction, with a third of these taking place before the end of 2018.
"We are confident that the end result will be a simpler, leaner and more agile organisation that drives culture change through pace, simplicity, efficiency and empowerment," Rolls Royce said in the statement.
The company will announce its full-year results on February 28.
The stock was trading 2.7% higher early on Wednesday at 801.80 pence a share.
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