Rolls-Royce engineers 24% profit rise, Ian Davis appointed as chairman

The aero engine maker roars into 2013 with a higher-than-expected profits and a new chairman in the left-hand seat.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013

Rolls-Royce has appointed former chairman of management consultancy McKinsey & Co Ian Davis and BP non-exec as its new chairman.

At BP, Davis was responsible – in part – for sorting out the whole Deepwater Horizon mess. Rolls-Royce is currently under investigation by the Serious Fraud Office over bribery allegations so it’s convenient that Davis is a dab hand with disaster management.

Apart from the spot of bother with the probe, Rolls-Royce is in fine fettle. Underlying pre-tax profits at the world's second largest aero engine maker rose 24% to £1.4bn in 2012, and revenues are up 8% to £12.2bn.

This means that Rolls-Royce is still on target to his its 20% profit growth forecast for 2013. Not bad going in the current economic climate.

Overall, the new Trent engine has been a real flyer in 2012, increasing the size of Rolls-Royce's order book 4% to £60.1bn. Plane manufacturers are still punching out new models at a rate of knots.

R-R’s new Trent XWB engine is to power the Airbus A350, while Boeing is planning to use the grunt of a Trent 1000-TEN in its ill-fated 787 Dreamliner from 2016.

Chief executive John Rishton says he plans to concentrate on making these engines for the lucrative civil market, as well as continuing to tender for contracts in defence aerospace and manufacture turbines for the marine and energy sectors.

Having offloaded its non-core tidal power generation business to Alstom last month, and sold 51% of its fuel cell business to LG, it’s clear that Rishton means to concentrate on Rolls-Royce’s money-makers over the coming year.

So far he's not doing too badly for a man who used to run a supermarket...

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