Rolls-Royce has reported a 1% dip in revenue for the first half of 2016, which reflects a non-cash impact of £2.2bn period-end mark-to-market revaluation of the company’s derivatives contracts. Rolls-Royce underlying profit before tax at £104m, down 80% at constant exchange rates
Underlying revenue was down 5% at constant exchange rates, led by Civil Aerospace and Marine divisions. Although deliveries of newer Trent engines have increased, the results were impacted by the Trent 700 and business aviation sales, as well as declining regional and other large engine fleet aftermarket revenues; increase in technical costs for large engines, including the Trent 1000 but some offsetting foreign exchange benefits.
Commenting on the results, Warren East, chief executive, said: “In the first half of 2016 Rolls-Royce performed broadly in line with expectations, delivering a result a little better than breakeven; and the outlook for the rest of the year remains unchanged. Order intake has been good and, although known headwinds constrained revenue and profit in the first half, the business remains well positioned to deliver a solid second half performance supported by growth in engine deliveries, stronger aftermarket revenues and incremental benefits from our ongoing restructuring programmes.”
Rolls-Royce highlighted its strong £3.4bn order book growth, which includes over £2bn foreign exchange benefit from long-term US dollar planning rate change. The manufacturer said that good progress has been made on new engine programmes, including the launch of the Trent XWB-84 EP with Singapore Airlines in February and Trent 1000 TEN receiving EASA certification in early July. It also stated that supply chain modernisation efforts were reducing costs and increasing capacity for Trent XWB ramp up.