13th Feb 2014 08:38
LONDON (Alliance News) - Rolls Royce Holdings PLC said Thursday that it expects a "pause" in both revenue and profit growth during 2014, reflecting offsetting trends across the business it said, after reporting a 19% rise in its order book, boosted by a good year in its Civil Aerospace division.
In its full-year statement of results for the year to December 31 2013 the firm said underlying revenue grew 27% to GBP15.5 billion from the GBP12.16 billion reported last year, including GBP2.6 billion from the Tognum business - a German industrial concern, which holds interests in a number of engine manufacturing brands and facilities, jointly owned by Daimler AG and Rolls-Royce.
Without the German business, the group reported a 6% revenue increase to GBP12.6 billion, with 7% growth in original equipment and 4% growth in services. In 2013, 47% of the Group's revenue was generated by the sale of aftermarket parts and services, down from 52% in 2012.
Despite this, profit before taxation decreased to GBP1.8 billion from the GBP2.8 billion reported last year.
Shareholders are also taking a hit, with the profit attributable to ordinary shareholders for the year fell to GBP1.4 billion from the restated 2012 figure of GBP2.3 billion. This resulted in decreased earnings per ordinary share attributable to shareholders to 72.44 pence from 123.73 pence.
The company is increasing its full-year dividend payment to ordinary shareholders by 13% to 22.5 pence per share from 19.5 pence per share last year. The firm said that its boosted order book provides good visibility of income streams in the future giving it the confidence to increase its dividend, adding that it remains focused on its "4 C" promises; Customer, Concentration, Cost and Cash.
Underlying profit before financing and taxation increased to GBP1.8 billion, a 23% rise, including a GBP180 million increase from Tognum. Excluding this business, profit was up 11% to GBP1.5 billion, reflecting volume growth, continued strong margins in Defence Aerospace and the restructured relationship with International Aero Engines, said the firm.
Rolls Royce said its order book grew by 19% during the year to GBP71.6 billion from GBP60.15 billion last year, excluding Tognum, the order book increased by 16% to GBP70 billion. The book was boosted by order for engines to power 334 widebody aircraft, making it a significant year for Civil Aerospace, Rolls Royce said. The order book increased in Civil Aerospace, Marine, Energy and Power Systems, but decreased in Defence Aerospace.
Of note, the firm said the Trent XWB, its largest single programme, is performing well in test flight and will power the new Airbus A350 into service later this year.
The order intake in 2013 included new orders of GBP18.9 billion in Civil Aerospace, GBP1.6 billion in Defence Aerospace, GBP2.7 billion in Marine, GBP1.1 billion in Energy and GBP2.7 billion in Power Systems. The regional composition remained in line with previous results, said the firm, with Asia and the Middle East representing 49% of the total order book.
The group expects underlying group revenue and profit to be flat for the year, reflecting a 15-20% decline in revenues in its Defence division, the consequence of well-publicised cuts in defence spending among major customers, and completion of the delivery phase of two major export programmes, it said. In addition, the Marine division will generate lower revenue in 2013, driven by Offshore. However, growth is expected to resume in 2015.
Rolls Royce said that it also expects profitability to be stronger in the second-half of this year, supported by the timing and mix of trading and cost reduction.
In order to be more consistent with market practice, the company's cash guidance in the future will be based on free cash flow, it said in the statement.
Looking ahead it said free cash flow for 2014 is expected to be similar to 2013's GBP781 million. On a divisional basis, the group said, "In Civil Aerospace, we anticipate modest growth in revenue and good growth in profit. In Defence Aerospace, we expect 15-20% reductions in revenue and profit. In Marine, we expect a modest reduction in revenue and modest growth in profit. In Energy & Nuclear, we expect good growth in revenue and profit. In Power Systems, we expect modest growth in revenue and good growth in profit."
John Rishton, Chief Executive 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."
Shares in Rolls Royce were trading at 1,079.9 pence down 10.75% Thursday morning, close to the bottom of the FTSE 100.
By Alice Attwood; [email protected]; @AliceAtAlliance
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