Rolls-Royce 2010 earnings were hit by the uncontained engine failure of a Trent 900 on a Qantas A380 last year, with the financial result of the commercial engines group hit by GBP56 million.
The company says that “a modest level of additional costs may be incurred in 2011.” The earnings hit already taken in 2010 also reflects settlement costs to customers that may not yet be on contract.
Departing chief executive John Rose, in announcing strong 2010 earnings, plays down the significance of the events, noting that “uncontained disc failures happen with a frequency of about once a year on the world’s large civil aircraft fleet” but that this was the first with a Rolls-Royce engine since 1994.
He also said that overall product development has been making progress, particularly on the TP400D turboprop for the A400M airlifter – where Rolls-Royce is a major partner on the Europrop International joint venture. He also listed the Trent 1000 for Boeing among the efforts to have “made good progress” despite several test setbacks in 2010.
Overall, Rolls-Rocye reported revenue of GBP11.1 billion, up from GBP10.4 billion the year prior, and a growth in the order book to GBP59.2 billion. The underlying profit was up to GBP955 million, GBP40 million above 2009 levels.
In 2011, Rose says modest revenue growth and underlying profits should “see good growth benefitting from a strong trading performance in civil aerospace” and other factors.
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