Rolls-Royce has confirmed that it expects profits to be towards the upper end of its guidance on Wednesday, sending shares up.
According to the statement, the engineering company expect to produce around 500 large engines to customers in 2018, slightly lower than its March projection of around 550.
“This reflects supply chain challenges that are affecting the whole civil aero engine sector and also early stage production ramp-up challenges on our new Trent 7000 engine. As we move into 2019 we are confident that Trent 7000 production and delivery volumes will increase significantly to meet our customer commitments.
“We have continued to make progress reducing large engine OE unit losses and will provide more details on this with our full-year results in February 2019.”
Alongside its civil aerospace division, Rolls-Royce also noted that its power systems operations witnessed “strong growth” during the first half of the year.
In addition, defence remained on track to meet its full-year guidance, with “stable” revenues.
Earlier this year, Rolls-Royce announced a restructuring plan in a bid to streamline costs. This is set to involve a 4,600 headcount reduction at the firm, which it expects to complete by the end of 2018.
Moreover, the statement also touched on uncertainties in the UK relating to Brexit negotiations.
Acknowledging the decision of the government to delay the vote on its Brexit proposal, the firm said the following:
“We will continue to implement our contingency plans until we are certain that a deal and transition period has been agreed.
“Specifically, we are working with EASA to transfer design approval for large aero engines to Germany, where we already carry out this process for business jets. This is a precautionary and reversible technical action which we do not anticipate will lead to the transfer of any jobs.
“We have begun to build inventory as a contingency measure, in line with the timetable that we gave in the summer.”
Rolls-Royce said they will update investors once there is greater certainty on Brexit developments.
Shares in Rolls-Royce (LON:RR) are currently trading +4.71% as of 13:52PM (GMT).
