Rolls-Royce has taken a hit of £56 million due to safety issues with the Trent 900 engine used to power the Airbus A380 superjumbo, the British company announced yesterday.
The fallout partly impacted the group’s annual net profit, which slumped 73 per cent to £480 million. Rolls-Royce was largely hit in 2010 by exceptional accounting charges, it added in an earnings statement.
Rolls-Royce said the 2010 profit figure compared with income after tax of £1.799 billion in 2009 and added that the Trent 900 problem may result in “a modest level of additional costs” for the company in 2011.
Its underlying performance was strong however, as Rolls reported better-than-expected pretax profits thanks to a buoyant order book.
Pre-tax profit climbed four per cent to £955 million in 2010, while revenue gained six per cent to £11.08 billion. Analysts had expected pre-tax profit of £945 million and revenue of £10.90 billion, Dow Jones Newswires reported.
“The strong order book and balanced portfolio gives us confidence that the group will double revenues organically over the next decade,” Rolls said in its earnings statement.
“We continue to have the management and financial capacity to accelerate growth through acquisition and partnership.”
The company’s results are the last to be presented by long-serving chief executive officer John Rose, who retires at the end of March.
“During 2011 the group expects good profit growth and a modest cash inflow,” Mr Rose said yesterday. He joined Rolls-Royce in 1984 and has been chief executive officer since 1996.
Rolls was rocked in November after one of its Trent 900 engine caught fire in mid-air, forcing an Airbus superjumbo flown by Australian airline Qantas to make an emergency landing.
Rolls-Royce has said that failure of a “specific component” caused the oil fire, which led Qantas to temporarily ground its six A380s.
The mid-air engine blast on November 4 sent shards of metal raining down on an Indonesian island and punched a hole in the wing of a Singapore-Australia flight.
Rolls yesterday said that safety of its products was the group’s “highest priority.”
It added in its earnings statement: “Each time a serious incident happens, Rolls-Royce and the aviation industry learn lessons. These are embedded in the rigorous certification requirements, safety procedures and standards of regulation which make flying an extraordinarily safe form of transport.”