Rolls-Royce H1 meets forecast, gets dividend boost

By Dan Lalor

LONDON (Reuters) - British engine maker Rolls-Royce (RR.L: Quote, Profile, Research, Stock Buzz) met forecasts with an 8 percent rise in first-half profit and promised more growth and a 10 percent dividend hike despite global economic conditions, lifting its shares on Thursday.

"The youth, scale and geographical diversity of our civil aerospace installed base, along with our broad portfolio, will help mitigate the consequences of uncertain conditions in the airline industry," Chief Executive John Rose said.

Rose also said the interim dividend, up 42 percent to 5.72 pence, would be about 40 percent of the total payout, meaning the total dividend will likely rise 10 percent to 14.3 pence.

Looking into the next decade, Rose said plans to capitalize on the resurgent civil nuclear market should result in material new business given the new-build and servicing opportunities.

Rolls-Royce made an underlying pretax profit of 410 million pounds ($819 million) in the six months to end-June, on revenue up 13 percent to 4.05 billion pounds.

Morgan Stanley analysts said, "We are encouraged by the positive signal that the dividend is likely to increase by 10 percent this year."

Rolls-Royce raised its dividend by a third in February, at the time of its 2007 results, to signal its confidence in future growth. Investors had hoped for a bigger payout at the time.

Rolls-Royce shares were up 1.9 percent at 375-3/4 pence by 0758 GMT (3:58 a.m. EDT). The stock touched a three-year low at 311 pence earlier this month on worries about the civil aerospace market as airlines unveiled plans to withdraw older, fuel-inefficient aircraft.