Rolls-Royce cheers results despite £790m engine fault hit
Rolls-Royce hailed a “breakthrough year” as it cheered better-than-expected underlying results despite taking a £790 million hit from its engine problems.
The group said underlying earnings jumped 71% to £633 million for 2018, up from £317 million reported the previous year.
But, on a statutory basis, the group said it swung to a pre-tax loss of £2.9 billion for 2018 against profits of £3.9 billion the previous year due to a raft of exceptional charges.
The group’s bill for technical issues with its Trent 1000 engines rose to £790 million over the full year, up from £554 million at the half-year stage.
It said its restructuring was on track, having already slashed its workforce by around 1,300, and is set to save £400 million in annual costs by the end of 2020.
Chief executive Warren East said: “Despite the challenges we faced on Trent 1000 in-service issues, solid progress has been made realising our ambition to make 2018 a breakthrough year, both strategically and financially.
“Underlying financial results are ahead of expectations, with good growth in profit and cash flow.
“Following the restructuring we announced in June last year, we are starting to see the crucial behavioural changes needed to sustain our momentum.”
The group also announced that it was pulling out of the competition to power Boeing’s proposed middle-of-the-market aeroplane platform, saying it does not have “every confidence that we can deliver to their schedule”.
The results show it has made around a third of the cuts under its swingeing overhaul, with 4,600 jobs being axed over the next two years.
But Rolls has been beset by problems with its engines recently.
Last year, the firm warned over costs linked to the discovery of technical issues with Trent 1000 engines.