ENP Newswire -
Release date- 14022014 -
Our priorities remain the 4Cs: Customer, Concentration, Cost and Cash. There has been good progress on Customer, particularly with on-time delivery. On Concentration, we continue to focus on our two technology platforms of gas turbines and reciprocating engines. We achieved a cash inflow of
The Trent XWB, our largest single programme, is performing well in test flight and will power the new Airbus A350 into service later this year.
In 2014, we expect a pause in our revenue and profit growth, reflecting offsetting trends across the business. This is a pause, not a change in direction, and growth will resume in 2015. Cash flow is expected to be broadly similar to 2013. Our record order book underpins our confidence in the long-term growth of our business.'
In 2013, the Group increased its order book by 19%, underlying revenue by 27% and underlying profit by 23%. The order book of more than
Our financial results now fully reflect our joint acquisition of
We continue to focus on the 4 Cs of Customer, Concentration, Cost and Cash.
It is essential that we deliver on the promises made to our customers. Across the business we have significantly improved on-time delivery. This foundational step will strengthen our customer relationships and drive more efficient use of resources, such as inventory. In
In 2013, major milestones were achieved in a number of important programmes. The Airbus A350 XWB flew for the first time powered by our Trent XWB engines. We have now received orders for more than 1,600 XWBs, making this our best-selling Trent engine. The Trent 1000 engine, which powers the Boeing 787 Dreamliner, has achieved the best performance of any new widebody engine entering service, with 99.9% despatch reliability.
In June, it was selected by
Concentration means deciding where to invest for future growth and where not. We have two technology platforms: gas turbines and reciprocating engines. Within gas turbines, we have a strong
In 2013, we acquired Hyper-Therm a specialist ceramics company, to increase our capabilities in ceramic matrix materials that will, in the future, play a critical part in improving the performance of gas turbine engines. We also acquired a Norwegian company, Smart Motor AS, a leader in the permanent magnet technology employed in our Marine business. We integrated PKMJ Technical Services, a US-based nuclear engineering services business with expertise in extending the life of nuclear plants.
Areas where we have decided not to grow include the sale of our 50% holding in the RTM322 helicopter engine programme to
The highly regulated nature of the aerospace industry means that it will take both time and tenacity to drive cost out of the business, and we are still not where we need to be. However, there are a number of areas where progress is being made. We reduced indirect headcount by 11%, with further savings identified for 2014. Unit cost fell in Marine, Energy and Power Systems, although this was more than offset by an increase in Civil, where capacity growth has preceded volume growth and the cost per unit has predictably risen.
We are building newer, more efficient facilities and capacity that will support a doubling of production of Trent engines. We are moving production away from high cost countries, and we are consolidating our supply chain. These actions will deliver benefits over time.
We have prioritised investment that improves operational performance, adds to our technical capability and reduces cost. This includes a shop floor IT modernisation programme that will increase operational efficiency and an Integrated Production Systems programme that will improve delivery to customers while reducing cost.
The Group delivered a cash inflow of
We continue to invest significantly to deliver our order book. In 2013, capital expenditure was
The order book increased 19%, to
The order intake in 2013 included new orders of
Underlying revenue increased 27% to
Underlying profit before tax increased 23% to
Following a review with the
This policy has been refined to align with our policy for capitalising development costs. The 2012 impact of the change in policy has been to increase underlying profit before tax by
Both underlying profit before financing and reported profit before financing in 2012 have been restated by -
The Group remains committed to maintaining a strong balance sheet and a strong investment grade credit rating. Standard & Poor's retains a rating of A/stable and Moody's a rating of A3/Stable.
The Group continues to have good liquidity with
On an accounting basis, pension liabilities reduced by
A cash inflow of
To better align our reporting structure with our organization, going forward we will report as: Aerospace and
For the full year 2014, we expect underlying Group revenue and profit to be flat. This reflects a 15-20% decline in Defence revenue, the consequence of well-publicised cuts in defence spending among major customers, and completion of the delivery phase of two major export programmes. Additionally, Marine will generate lower revenue in 2014, driven by Offshore. We expect growth to resume in 2015.
We expect profitability to be stronger in the second half of 2014, reflecting the timing and mix of trading and cost reduction. To be more consistent with market practice, our cash guidance in the future will be based on free cash flow. We expect our 2014 free cash flow to be similar to 2013 (
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