Rolls-Royce (RR.) made an underlying pre-tax profit of over £1.4bn in 2012. A decade ago it was just £255m. True, the acquisition of Tognum and restructuring its relationship with Pratt & Whitney made a big contribution to the 24 per cent increase in profits, but cost cutting and a booming civil aerospace business will drive double-digit growth at the engineer this year, too.
Selling its stake in International Aero Engines (IAE) to Pratt & Whitney made Rolls another £699m last year, boosting the reported figures in our table and adding £942m to its cash pile. Even without IAE, the core civil aerospace division made an extra 27 per cent as it kept pace with a sharp increase in aircraft production. Margins here increased by a fifth and over £10bn of new orders for fuel-efficient Trent engines grew the unit’s order book to £49.6bn, easily justifying management’s confidence in strong profit growth again this year.