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The Markets
by Proactive
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The Markets
by Proactive
Proactive UK has moved.
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Aerospace

Rolls-Royce cheers market by sticking to annual forecasts

Jet engine maker unveils higher orders but lower profits

Jet engine maker Rolls-Royce (LON:RR.) avoided springing more nasty surprises in first half results on Thursday, prompting a sigh of relief from analysts.

Rolls, which warned on profits earlier this year and in 2014, kept revised guidance for annual revenue, profit and cash unchanged in results for the six months to June 30.

In July, it shocked the market by announcing that a downturn in its marine division was likely to hit group annual profits by about 5%.

On Thursday, it said its order book had risen by £2.8bn to £76.5bn. But underlying revenue fell 3% to £6.3bn and pre-tax profit dipped 32% to £439mln.

As forecast in July, it said lower demand for the Airbus A330 would hit deliveries of its Trent 700 engine in the second half and in 2016.

It also reiterated that it expected weakness in offshore markets to hold back full year 2015 and 2016 performance in marine.

But new chief executive Warren East said its second half outlook remained positive.

East said: "The continued growth in our order book demonstrates the long-term demand for our innovative products and services, and underpins my confidence in the fundamental strength of our business."

Shares in Rolls rose 16p to 746.5p.

Liberum Capital noted the lack of surprises in the results and management's reiteration of confidence in the group's revised estimates.

The broker's analysts said: "The shares have bounced after the prior three warnings but the way ahead appears long.

"However, we believe Warren East is a positive addition to the story."

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