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Rolls-Royce's Trent 1000 costs rise to £2.4bn after new delay

There will be a £1.4bn exceptional charge in this year’s results to cover additional customer disruption and provisions for losses on contracts.

Rolls-Royce Holdings PLC -
Rolls has increased its provisions by £800mln

Rolls-Royce PLC (LON:RR.) has warned profits will be at the lower end of guidance after the engineer made more provisions for the troubled Trent 1000.

The engines group said it has made progress in resolving issues with the engine but the final fix – an improved high-pressure turbine blade - has been pushed back to 2021 due to a more conservative estimate of the HPT durability.

As a result, there will be a £1.4bn exceptional charge in this year’s results to cover additional customer disruption and provisions for losses on contracts.

Total costs for resolving the problem have now risen to £2.4bn including the additional £400mln provision and £400mln of costs previously included within normal contingencies.

Rolls said it is taking on additional maintenance staff and using spare engines to reduce disruption to customers.

Warren East, RR's chief executive, said: “We have completed a detailed technical evaluation of our work on an improved high-pressure turbine blade for Trent 1000 TEN, the last major redesign activity required for the issues which we have identified with the engine.

“Although we regret that the blade will not be ready when we had originally planned, our understanding of the technical issues has significantly improved. As a result we are now able to reset our financial and operational expectations for the engine based on a blade design with a prudent durability estimate that we are confident we can deliver." he added.

East also pointed out the engines maker should generate at least £1bn in free cash flow in 2020.

Quick facts: Rolls-Royce Holdings PLC

Price: 733.2 GBX

LSE:RR.
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Market Cap: £14.16 billion
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