Engineering and aircraft engine manufacturer Rolls-Royce has reported healthy order books for the first half of 2008 due to its product range and efficiencies.
Rolls-Royce said its order book increased by 17 per cent to £53.5 billion, compared to order of £45.9bn for the same period in 2007. Sales increased to £4,049m and service revenues were up by 12 per cent.
“We are confident that we will continue to deliver profitable growth and positive cash flows for the full year,” said Sir John Rose, chief executive of Rolls-Royce. “We have delivered a strong set of half year results.”
Asia and the Middle East now account for 40 per cent of total business at Rolls-Royce.
In January Rolls-Royce announced a restructuring programme which saw its headcount reduced by six per cent as 2,300 managerial, professional and clerical staff in its UK headquarters and US, German and Nordic officers were made redundant. Rolls-Royce said the restructuring cost the company £36m and was a result of the increasing cost of raw materials and a weak US dollar. The US continues to be a powerful customer for the Derby based company, with US defence expenditure accounting for 45 per cent of its revenues.
Over the last two years Rolls-Royce has been involved in an enterprise-wide implementation of SAP, led by its director of business process improvement Jonathan Mithcell. SAP was integrated across its aerospace and energy divisions, which manufacture airliner engines and nuclear power plants respectively. “We were looking for the business benefits, and a large number of facts independently affected this. One of the most important benefits was to release significant manufacturing capacity, and free up the supply chain,” says Mitchell. Globally Rolls-Royce has 18,000 SAP users.
With air travel being hit hard by rising oil prices and a recession predicted to affect the sector further, Rolls-Royce said it will not be able to avoid the economic slow down, but believes it is well placed to avoid the worst of the damage due to its product range. “The relative youth and fuel efficiency of the Rolls-Royce installed base, which has an average age of eight years, makes it less likely that Rolls-Royce powered aircraft will be grounded,” it said in its interim results.