Thursday, July 30, 2015

News: Investment in Rotherham sets Rolls-Royce up for long term

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Investments made by Rolls-Royce, such as the new £110m facility in Rotherham, are expected to improve production and create a strong platform to drive customer service, improved margins and strong cash flows.

The world-renowned engineers have released the latest financial results for the six months to June 30 which saw underlying revenue down 3% to £6.3bn from the £6.5bn in the first half of the year. Profit before tax was down 32% to £439m from £646m in the first half.

Despite having a growing order book that tops £76.5bn, Rolls-Royce has been forced to issue a number of profit warnings due to a weaker marine business and lower than expected demand for some products, including the Trent 700 engine. Having begun a restructuring programme in its aerospace business, the company said that the product transition in civil aerospace will drive long-term growth and that its "industrial transformation" will deliver that growth.

During the period, Rolls-Royce officially opened its Advanced Blade Casting Facility on the Advanced Manufacturing Park (AMP) in Rotherham. The most advanced turbine blade casting facility in the world will employ 150 people and have the capacity to manufacture more than 100,000 single crystal turbine blades a year. These blades will feature in a wide-range of Trent aero engines.

The financial report said: "In order to maximise the benefit of our growing order book, we are investing in our global industrial base and establishing a more competitive supply chain. The new facilities are leaner, more cost efficient and more flexible. For example, during the last six months we opened our Advanced Blade Casting Facility in Rotherham, UK, which will halve the time it takes to manufacture turbine blades."

As the Trent 700 approaches the later stage of its delivery lifecycle, Rolls-Royce is making a transition to newer engines such as the Trent XWB (the world's most efficient large civil engine) and the Trent 7000. The statement added: "While the impact of the transition to the Trent 7000 has reduced Trent 700 deliveries, and will hold back civil aerospace profit in the near term, we are confident that the important investments we are making to transition our production will create a strong platform to drive customer service, improved margins and strong cash flows."

The 150,000 sq ft Rotherham foundry is used for Rolls-Royce's pioneering work in the manufacture of single crystal (SX) turbine blades. The advanced turbine blade castings are produced for the company's most modern, high-thrust engines. There are over 65 in every iconic Trent engine and 182 turbine blades in each Trent XWB engine.

There are two types of turbine blade manufactured at the Rotherham facility: high pressure (HP) and intermediate pressure (IP) single crystal blades. The capacity is set to increase to 200,000 blades a year when the pioneering manufacturing process has been proven.

Warren East, chief executive at Rolls-Royce, said: "In the near term, we are managing a significant transition from mature engines to newer, more fuel efficient ones, such as the Trent XWB, Trent 7000 and Trent 1000. At the same time, we are taking appropriate actions to mitigate the effects of weakness in our offshore marine markets.

"While these create a profit headwind in the near term, it is critical we successfully deliver our product launches, complete our supply chain transformation and sustain investment in our businesses to strengthen their competitive positions. The initial phase of my ongoing operational review has and will continue to concentrate on how we drive improvements and sharpen our focus to make us a more resilient and sustainable business."

Rolls-Royce website

Images: Rolls-Royce

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