Engine-maker positive on future

By THIS IS MONEY
Updated:

 

Aircraft engine manufacturer Rolls-Royce has announced it was confident the company could weather turbulent trading conditions in the aircraft industry.

With expected cuts in orders from Boeing and other manufacturers and adverse exchange rates, profits were likely to be hit this year.

But the company said it had orders for £13 billion worth of engines for 2000 and expected its share of the market to continue to grow.

The company, which bought engineering-to-defence group Vickers last year, has undergone a major restructuring programme in 1999 and will continue to streamline its overheads in 2000.

Chief executive John Rose said: 'We intend to accelerate the restructuring programme this year and will continue to target double digit growth.'

The restructuring will cost the company about £100 million in 2000.

Mr Rose would not be drawn on whether the company was in talks to sell off the defence industry side of Vickers.

'We never comment on speculation,' he said.

Rolls-Royce tripled its engine deliveries over the last five years. Last year its overall sales grew by 14%.

The company will continue to build up co-operation deals with other engine makers, yet Mr Rose refused to comment on speculation that a takeover of US manufacturer Pratt & Whitney was a possibility.

Rolls-Royce will make further inroads into e-commerce and Mr Rose stated that his company had already fully embraced the significance of the new technology.

He said 60% of orders were received on line and 60% of its annual purchase orders were placed electronically.

The company would continue to expand this area of business development.

Pre-tax profits were up 11% to £360 million for the year ending December 31 1999 compared with £325 million in 1998.

Turnover was £4.74 billion in 1999 against £4.5 billion a year earlier.

The total dividend payment to shareholders will be 7.25p for 1999 compared with 6.55p in 1998.

Most watched Money videos