Rolls-Royce on Target to Meet Full-Year Forecast as First-Half Sales Rise

Rolls-Royce (RR.L), a British manufacturer of aircraft engines, said early on Tuesday that it was on track to meet its full-year guidance even as underlying core earnings per share fell in the first half despite a jump in sales.

Reported revenue rose to 7.88 billion pounds ($9.57 billion) during the first half of 2018, from 7.49 billion pounds a year ago, the company said in its earnings statement. Sales rose as the firm’s civil aerospace business, the biggest revenue grosser, saw turnover increase in double digits with 257 large engines delivered amid improved pricing.

Despite the jump in total sales, the firm still reported an underlying core loss per share of 1.4 pence, versus earnings of 3.1 pence a year earlier. In addition to a near doubling of financing costs in the first half, the cost of sales and expenses also advanced.

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Rolls-Royce, which expects an acceleration in the run-rate of its cost savings in the second half, noted that its restructuring program was progressing as expected, with 134 million pounds of cuts achieved in the first half. The company, however, warned that its Trent 1000 engine in-service costs will rise by about 100 million pounds across the next three years.

“We delivered further progress across the group in line with our full-year expectations,” Chief Executive Officer Warren East said in the statement. “We expect a significant improvement in cash in the second half as we unwind inventory built up to support customer deliveries and benefit from improved trading in both Power Systems and Civil Aerospace.”