Rolls-Royce assures over profits as it offsets engine inspection bill
The firm said it has completed around two-thirds of the initial engine inspections, with the rest to take place in the next six weeks.
Rolls-Royce said it has “re-prioritised” discretionary spending across the business to offset higher-than-expected costs after ramping up inspections following issues on hundreds of its Trent 1000 engines.
In an update ahead of its annual general meeting, the group assured it remained on track for full-year profit and cash guidance as a result of the move, having earlier warned over a £340 million repair bill and surging inspection costs.
Rolls said it has completed around two-thirds of the initial inspections, with the rest to take place in the next six weeks.
The group said in March that up to 500 Trent 1000 engines – used on Boeing 787 planes – were affected by the issues, which see components wear out earlier than expected.
It revealed last month that it would book higher costs from accelerating the inspection programme.
But chief executive Warren East said in its latest update: “We have re-prioritised various items of discretionary spend to mitigate these incremental cash costs.”
He added: “We sincerely regret any disruption these inspections may cause and we continue to work closely with Boeing, our customers and the regulatory authorities to minimise this.
“In addition to mobilising specialist teams to support these inspections across the globe we have also made significant progress in identifying and developing additional MRO (maintenance, repair and overhaul) capacity which will enable us to return those engines requiring maintenance more rapidly to our customers.”
Rolls confirmed that profits would be heavily weighted towards the second half of its financial year.
Mr East assured the year had “started well” and the group was making “significant progress” with overhaul efforts.
Rolls has hired advisers Alvarez & Marsal to help slash costs and streamline its business as part of the wide-ranging restructure announced in January.
On announcing full-year results in March, it signalled this could lead to further job losses as it will look to cut out duplicate roles in its support and management functions.
Annual figures showed Rolls returned to profit last year with a pre-tax surplus of £4.9 billion, thanks to a £2.6 billion accounting boost from the recent strengthening of the pound.