Engine troubles weigh on Rolls-Royce despite ‘good end’ to 2019
Rolls-Royce has posted an £852 million loss as persistent problems with its Trent 1000 engine overshadowed record engine deliveries.
The company saw shares push higher in early trading after it posted the loss, which narrowed by 27% from its £1.16 billion loss in 2018.
Rolls-Royce said it was impacted by £578 million related to the engine problems, as well as a £1.4 billion exceptional charge.
However, the firm saw underlying profits jump 25% to £808 million as it was buoyed by a stronger second half period.
Warren East, chief executive of the business, said it had a “good end” to the year “after a challenging first half” and saw its restructuring efforts gain momentum.
The manufacturer said it delivered £269 million of cost-savings during the year.
Looking forward, the company said the outbreak of coronavirus is “likely to have an impact” on air traffic growth in the near term.
Mr East added: “The situation is still evolving, and as such our guidance for 2020 excludes any material impact.
“We are monitoring developments, taking mitigating actions, and will update the market as appropriate.”
Julie Palmer, partner at Begbies Traynor, said: “It’s been a turbulent year for Rolls-Royce, with issues surrounding its Trent 1000 engine, supplier payments and the pace of its turnaround programme.
“Design glitches on the Trent 1000 engine has meant millions has been put aside for repairs, causing a number of Boeing’s popular 787 Dreamliners to be grounded, damaging the longstanding relationship between the companies and losing major contracts.
“The firm’s woes are also being felt further down the line with a failure to pay suppliers on time leading to the removal of the company from the prompt payment code – a significant dent to its reputation as the one time darling of British engineering.”
In a separate announcement, Rolls-Royce said Dame Angela Strank, who is currently chief scientist and head of downstream technology at BP, will join the company as a non-executive director from May.
Shares in the company rose 4.5% to 627.4p on Friday morning.