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Rolls-Royce revamp on track as earnings to revive in second half

38246808 - 02_05_2016 - BRITAIN-ECONOMY_MANUFACTURING PMI.jpg
Rolls-Royce Holdings Plc said trading so far this year has matched expectations and that restructuring plans are on track, confirming that its full-year earnings will be weighted toward the second half.

[LONDON] Rolls-Royce Holdings Plc said trading so far this year has matched expectations and that restructuring plans are on track, confirming that its full-year earnings will be weighted toward the second half.

The UK aero-engine maker said in a statement Friday that it expects to be "close to breakeven" in the first six months, before increased deliveries of larger turbines and the benefits of cost-cutting measures begin to weigh in.

Chief Executive Officer Warren East reiterated that 2016 will be a "challenging year overall" as London-based Rolls transitions between products and responds to weaker demand at its marine unit, which mainly serves the oil industry.

Rolls-Royce shares rose the most in 12 years on Feb 12 as Mr East ended a run of six profit warnings by saying a £650 million (S$1.28 billion) hit against 2016 earnings from slowing business-jet sales, slumping revenue from maintaining regional aircraft and the marine-engine issue wouldn't worsen.

Free cash flow will also be significantly more weighted toward the second half than in 2015, Mr East said today, while the outlook excludes foreign-exchange effects that could boost revenue by 450 million pounds and improve pretax profit by 50 million pounds.

Rolls-Royce said it's well on track to deliver targeted cost saving of 30 million to 50 million pounds this year, and that the restructuring programs within its civil aerospace, defense and marine arms are also proceeding as planned.

The company delivered the update ahead of its annual shareholder meeting in Nottingham, close to its main manufacturing site in Derby, England.

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