Rolls-Royce confirms full-year profit guidance as it flies past supply problems

James Booth
Rolls-Royce says it expects to hit its full-year profit guidance (Source: Getty)

Aerospace and defence giant Rolls-Royce has confirmed its full-year profit and cashflow guidance for 2018 with expectations that it will be in the upper end of its previously announced range.

The enginemaker said it expected operating profit to be £400m, plus or minus £100m, with cashflow expected to be £450m, plus or minus £100m.

Its shares rose 3.71 per cent in morning trading.

The announcement comes as Rolls-Royce is grappling with supply issues around some of its engines.

Rolls-Royce said it expected to deliver around 500 large engines to its customers this year as previously indicated in October, but lower than its March projection of around 550 engines.

It said: “This reflects supply chain challenges that are affecting the whole civil aero engine sector and also early stage production ramp-up challenges on our new Trent 7000 engine.”

The company said it expects Trent 7000 production and delivery volumes to increase significantly as it moves into 2019.

Sandy Morris, an equity analyst at Jefferies International, said: "Without donning our rose-tinted spectacles, we believe the trading update should at least reassure."

Rolls-Royce said the restructuring it announced in June remains “on track”.

It is committed to cutting its workforce by 4,600 over the next two years, with around a third of that reduction to take place before the end of this year.

Regarding Brexit, the company said it had begun stockpiling supplies as a “contingency measure” and had liaised with its suppliers and examined its logistics options to make sure it has “the required capacity available”.

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