* H1 pretax profit 637 mln stg vs consensus of 615 mln stg
* Revenue up 5 pct to 5.8 bln stg
* Interim dividend 10 pct up to 7.6 pence/share
* Shares up 4.8 pct
By Rhys Jones
LONDON, July 26 Rolls-Royce posted a
better-than-expected 7 percent rise in first-half profit, driven
by increased production at planemakers Airbus and
Boeing who are responding to growing demand from airlines
for new fuel-efficient planes.
Rolls, the world's second-largest maker of aircraft engines
behind U.S. group General Electric, on Thursday reported
an underlying pretax profit of 637 million pounds ($985.66
million) for the six months to the end of June on revenues 5
percent higher at 5.8 billion pounds.
Europe's Airbus and U.S. rival Boeing are ramping up output
and are targeting more than 1,100 deliveries this year.
The company, whose website says a Rolls-Royce powered
aircraft takes off or lands every 2.5 seconds, raised the
interim dividend by 10 percent to 7.6 pence per share and said
it expected to deliver further growth in 2012 in spite of global
"For the full year, we continue to expect good growth in
underlying profit with cash flow around breakeven," chief
executive John Rishton told reporters.
"The volatility of the economic environment -- whether it's
in Europe, a slowdown in China or the U.S. -- does have an
impact and none of us are immune to this. But the diverse range
of products we produce and the geographic spread we have helps
The group sells aero, defence, marine and energy products to
businesses and governments in more than 100 countries.
Rolls was expected to post an average pretax profit of 615
million pounds for the first six months of 2012, according to a
Thomson Reuters analyst poll, which predicts it will deliver
1.43 billion pounds of profit in the full-year.
Shares in Rolls-Royce, which have risen 14 percent in 2012,
were 4.8 percent up at 869.50 pence by 0824 GMT, valuing the
company at around 16 billion pounds.
"We view these as positive results in the key aerospace
area, which for us remains the major driver of the stock," said
RBC analyst Rob Stallard.
Global airlines will buy $3.5 trillion of aircraft over the
next 20 years to meet demand for travel to and from emerging
markets - especially in Asia - and renew ageing fleets in the
West, according to the world's big two planemakers. Airlines
are investing in new lightweight planes to lower fuel costs,
which are soaring.
The predictions underscore soaring demand for narrowbody or
single-aisle jets. Analysts forecast that 20,000 narrowbody
planes will be produced in the next 20 years.
Rolls, which has more than 5,000 engines worth some 50
billion pounds on order, said revenues at its main civil
aerospace unit rose 17 percent in the last six months. Around 60
percent of the unit's revenues come from aftermarket services.
A new joint venture between Rolls and U.S. rival Pratt &
Whitney to develop the next generation of engines for
the mid-sized aircraft market would be cleared in the
"foreseeable future", said Rishton.
The company said its order book rose 4 percent to 60.1
billion pounds during the period, while net cash roughly
quadrupled to 869 million pounds, helped by last year's sale of
its stake in the International Aero Engines consortium.
"I haven't got any immediate plans to spend that cash -
having cash in the bank is very helpful for me because I can
sleep well at night and not worry too much," said Rishton,
adding that the group would focus on delivering the benefits
from last year's acquisition of Tognum before making more deals.
Earlier this week Rolls said it had been forced to replace a
component on a number of its Trent 1000 engines which power
Boeing's new 787 Dreamliner after Japan's All Nippon Airways
grounded part of its 787 fleet following tests which
revealed a risk of engine corrosion.
Rishton said the company would not take a significant
financial hit from the incident.