Midland aero-engine giant Rolls-Royce yesterday shrugged aside worries over delays to the Airbus A380 programme to produce a much better-than-expected first half performance with profits, dividends and cash generation all ahead of analysts' estimates.
Shares closed 21.25p up at 442.75.
The Derby-based group, which posted a 22 per cent increase in underlying pretax profits to #324 million for the six months to June 2006, said it won orders worth #5.1 billion in the half, adding that the recent delays to the A380 programme would have "no material impact" on the long-term performance of the company.
"Although there will be delays on this project, we still believe the A380 programme has plenty of traction," said group chief executive Sir John Rose, pointing to the recent order by Singapore Airlines for an initial nine Airbus A380-800 superjumbos and twenty of the new Airbus A350 XWB-900s. Airbus, 80 per cent owned by EADS, recently shocked the aviation market after it warned of production delays to its flagship A380 superjumbo aircraft.
Airbus is also revamping its A350 airliner in a bid to regain ground lost to its US rival Boeing and unveiled a new extra wide body jet - the A350 XWB - at the Farnborough Air Show earlier this month.
The industrial launch of the A350 XWB is expected to take place in early October and is scheduled to enter service in mid-2012.
Rolls said it would rejig its engine plans for the new A350 after the announcement.
Sir John confirmed that the company would be investing fresh sums into a new A350 XWB configuration based on the Trent 1000 jet engine.
He declined to give the exact level of investment required, but said it would not breach the group's strict research and development criteria - traditionally five per cent of group sales.
"Although the timing on the delivery of the new A350 XWB has shifted to the right, we still believe Rolls is well positioned for future orders from this aircraft. We wouldn't be investing in it if we didn't believe it had a good business case," he added.
Turning to the delays on the A380, he acknowledged that it would "take time for the dust to settle", but pointed out that only 20 per cent of Rolls' civil aviation work was for the Original Equipment Manufacturers (OEMs).
"The strength of our order book and the continuing growth of our civil aerospace aftermarket means we are confident in the growth model for our business," he added.
The group's total order book swelled to #25.1billion at end-June, while the aftermarket for service sales - which now accounts for 54 per cent of group sales - is set to grow by more than ten per cent for the remainder of 2006.
The group is maintaining its guidance for the full year to December, despite the combined headwinds of higher commodity prices and a weaker dollar exchange rate.