FTSE 100-listed Rolls-Royce today reported a loss of £852m after problems with its Trent 1000 engine overshadowed record engine deliveries at the firm.
Operating profit rose 25 per cent to £808m, ahead of £616m last year, driven largely by an improvement in the engine maker’s civil aerospace division.
Revenue increased seven per cent to £15.5bn, up from £15.1bn in the same period last year.
The company increased its free cash flow to £873m, up from £568m in 2018, driven by its underlying profit improvement.
Earnings per share were flat year on year at 11.7p a share.
Why it’s interesting
In addition to the loss, Rolls-Royce was hit by a £1.4bn charge to full-year operating profit because of troubles with the Trent 1000, which the firm had predicted back in November.
Insurance receipts for the model gave the firm £173m over the course of the year.
The company has been plagued by problems with the engine since 2016, when cracks were discovered in blades on the engine’s turbine.
Rolls-Royce has had to pay millions to airlines which were forced to ground planes due to the engine problems and has also spent millions repairing engines and coming up with design fixes to improve durability.
What Rolls-Royce said
Chief executive Warren East said: “After a challenging first half, we had a good end to 2019, delivering 25% growth in full year underlying operating profit and an encouraging level of free cash flow.
“Our restructuring efforts gained momentum, with run-rate cost savings of £269m. Civil aerospace improved its underlying profit significantly, with record engine deliveries, good aftermarket performance and improved unit losses.
“We continued to invest significantly in R&D and took important steps towards becoming a leader in low carbon technologies. We grew our electrical capabilities with the acquisitions of Siemens’ eAircraft business and a majority stake in Qinous, as well as developing new in-house hybrid-electric solutions.”