Rolls-Royce results 2008Rolls-Royce sees good results for 2008
Gutes Jahresergebnis des Triebwerksherstellers<br /> Sir John Rose, Chief Executive, said: “We have delivered a good set of results, with strong order intake, cash flow and underlying profit growth achieved in challenging conditions. 2009 will be a very difficult year for the global economy.
Our well diversified portfolio, the scale of our installed base and the strength of our balance sheet give us confidence that Rolls-Royce will respond successfully to current challenges and develop the business for the longer term. Our current view is that in 2009 underlying revenues will continue to grow, with underlying profits remaining broadly similar to those achieved in 2008. Average net cash is expected to increase despite a cash outflow in the year”.
Rolls-Royce's performance in 2008 was characterised by strong order intake, cash inflow and underlying profit growth. The current economic crisis will have an impact on the Group, its customers and suppliers, but it is too early to be precise about the scale and duration of these effects. Rolls-Royce delivered strong underlying revenues, cash flow and growth in underlying profits in 2008. Despite some weakening demand towards the end of the year, the Group's global presence has enabled it to secure orders worth £21.5bn, increasing the order book by 21 per cent to a record £55.5bn. Sales increased by 22 per cent to £9,082m relative to 2007 and underlying sales grew by 17 per cent, with a 24 per cent growth in original equipment and an 11 per cent increase in services revenues. This growth was achieved despite delays on major airframe programmes that reduced civil engine deliveries from the original programme assumptions. We have continued to invest in the acquisition and development of technology. In 2008 investment in research and development totalled £885m (2007 £824m), of which the Group funded around 55 per cent, representing 5.4 per cent of underlying sales. We expect investment in research and development to account for a similar proportion of underlying sales in 2009.
Underlying profit before tax, which adjusts primarily for the non-cash impact of the hedge book, increased by ten per cent to £880m (2007 £800m). This reflected strong growth in original equipment and service revenues and was despite an eight cent deterioration in the achieved US dollar rate, which reduced profit by £104m (2007 £92m), and a four per cent increase in unit costs.
The Group's published loss before tax of £1,892m includes the effects of marking to market the Group's financial instruments, for which hedge accounting is not adopted. These consist mostly of the book of foreign exchange contracts outstanding at 31 December 2008. The impact of the mark to market is included within net financing in the income statement. The net adjustments caused a net £2.8bn reduction in published profits. The majority of these adjustments are non-cash, accounting adjustments required under IAS 39 for financial instruments that the Group holds to provide stability of future trading cash flows and do not reflect the underlying trading performance of the Group in 2008.