Engineering Magnet Rolls-Royce Suffers £2.9 Billion Loss in 2018
Increased fixation rates for Trent 1000 engines and halt in A380 production are major factors behind loss
LAHORE MIRROR (Monitoring Desk)– The year 2018 was not a fortune for global engineering giant Rolls-Royce that suffered loss last year, as it enhanced the charge for fixing problems with its Trent 1000 engines.
The stoppage of superjumbo aircraft A380 production by Airbus also caused £186m loss to the company.
Rolls-Royce reported a pre-tax loss of £2.9bn for 2018, down from a profit of £3.89bn the previous year.
The firm also withdrew a bid to supply an engine for a new Boeing plane.
The company’s shares were the biggest fallers on the FTSE 100 – down more than 4 per cent at one point.
Underlying operating profit, which strips out the exceptional items, jumped 71 per cent to £633m, up from £317m in 2017.
“Underlying financial results are ahead of expectations, with good growth in profit and cash flow. Following the restructuring we announced in June last year we are starting to see the crucial behavioural changes needed to sustain our momentum,” chief executive Warren East said.
The company announced last summer that it was cutting 4,600 jobs over two years as part of a major reorganisation.
Last year, a fault with Rolls-Royce’s Trent 1000 engines grounded planes at British Airways and other airlines. The engine powers Boeing’s 787 Dreamliner.
At the time, the company said the issues would take “some years” to fix. It said parts in its Trent 1000 engines were wearing out faster than expected but that it “had a solution” to the problem.
In its results statement, Rolls-Royce said it had increased the charge it had taken on fixing problems with its Trent 1000 engines to £790m, up from £554m.
Rolls-Royce also said that following the Airbus decision to stop delivery of the A380 in 2021 it had assessed the impact on its Trent 900 engine programme and associated customers and suppliers.
As a result it had recorded an exceptional item of £186m in the 2018 results which “relates to onerous contracts, tooling write-offs and the acceleration of depreciation and amortisation on associated Trent 900 programme assets”.
The company is refocusing its business on civil aerospace, defence and power systems.
However, it has said it will no longer compete to supply engines for Boeing’s proposed new mid-sized jetliner to fill a gap between the narrow and wide-body aircraft.
“We are unable to commit to the proposed timetable to ensure we have a sufficiently mature product which supports Boeing’s ambition for the aircraft,” Rolls-Royce said.
SOURCE: BBC NEWS