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Rolls-Royce repeats forecast for strong profit growth Rolls-Royce repeats forecast for strong profit growth
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Rolls-Royce is on course to deliver strong profit growth in 2012 as it continues to benefit from airlines' need for more fuel-efficient planes, the company says. Rolls-Royce is on course to deliver strong profit growth this year as it benefits from demand for fuel-efficient plane engines in Asia, South America and the Middle East.
The world's second-largest maker of aircraft engines said in a statement it had made a good start to the year and repeated its forecast that its civil aerospace unit would deliver strong growth in underlying profit. While European carriers, aside from easyJet and Ryanair, continue to struggle for profits, the likes of Emirates, Cathay Pacific and Brazil's TAM are expanding rapidly, generating orders for Rolls-Royce's Trent engines. In an interim management statement published on Friday ahead of the company's annual general meeting, the Derby-based firm said it continued to expect "good growth in underlying revenue and underlying profit".
"For the full year, the group continues to expect good growth in underlying revenue and underlying profit with cash flow around break-even as we continue to invest in future growth," said Rolls-Royce, which makes engines for Airbus and Boeing. Rolls-Royce specialises in engines for twin-aisle, long-distance aircraft such as the Airbus A330 and A380. Its Trent XWB engine, for the yet-to-be-launched Airbus A350 aircraft, recently underwent its first test flight, attached to the wing of an A380. Civil aerospace accounts for around half of Rolls-Royce's revenues, generating sales of £5.6bn last year with an order book worth £51.9bn.
Analysts forecast that 20,000 narrow-body planes will be produced in the next 20 years. Fuel efficiency is a key issue for airlines grappling with volatile energy bills that account for around a third of the industry's costs. According to the International Air Transport Association, the industry's fuel bill will be $198bn (£122bn) this year, up from $178bn in 2011 and more than four times the total in 2003. That has spurred demand for technology such as the new A320neo short haul jet and the Trent XWB engine, which is 15% more fuel efficient than its predecessors and is Rolls-Royce's fastest-selling engine.
A new joint venture between Rolls and US rival Pratt & Whitney to develop the next generation of engines for the mid-sized narrow-body aircraft market is expected to be officially formed this year. Last year Rolls-Royce reported a 4% rise in underlying revenues to £11.2bn. Pre-tax profits rose by 21% to £1.1bn.
The Derby-based engineering company, whose website claims that a Rolls-Royce-powered aircraft takes off or lands every 2.5 seconds, said its new Trent XWB engine took to the skies on an Airbus A380 flying test-bed during the quarter. It also opened a new facility in Singapore which will produce fan blades and assemble and test large commercial jet engines.
Shares in Rolls-Royce, which have risen 16% in 2012, closed at 859p on Thursday, valuing the company at around £16bn.