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Rolls-Royce ramps up cost savings as markets remain mixed
[ LONDON] Rolls-Royce, the British jet engine maker recovering from a string of profit warnings, said it would deliver annual cost savings at the top end of its target to help it cope with mixed market demand.
The company, which makes engines for military jets, ships and nuclear-powered submarines, is one year into a turnaround programme aimed at cutting costs after a slowdown in several of its biggest markets hit profits.
The company, Britain's pre-eminent engineer, said on Wednesday it now expected its cost savings to be at the top end of a £150 million (S$264 million) to £200 million range.
While it is trading in line with expectations for 2016, it said the wider market outlook was mixed.
Demand for its engines for extra wide body civil aircraft was strong, but there was further weakening in business aviation and no sign of recovery in offshore oil & gas markets for marine, where its order book remains "very weak".
For 2017 Rolls said the near-term market remained mixed while the long-term order book remained at near record levels. "We have made steady progress in 2016 to date, delivering a ramp up in large engine production and implementing the first stage of our transformation programme," Chief Executive Warren East said. "Overall, we remain comfortable that our expectations for profit and free cash flow remain achievable."