Rolls-Royce shares jump 12%

Rolls-Royce shares rocket 12% on good results

Shares in Rolls-Royce have jumped almost 12% after the company reported a large increase in profits.

The company has posted full-year underlying pre-tax profits of £436m, which amounts to an 18% increase.

This stock is going up and up and up

Harald Hendrikse
CSFB

The stock was trading up at 213.55p at 1230 GMT, touching levels not seen since early December.

"Investors have been overly-negative and even with decent results, the stock would have gone up," said Harald Hendrikse, aerospace analyst at Credit Suisse First Boston.

"But they were very good results," he added. "This stock is going up and up and up."

Pre-tax profits

The company's £436m in profit for the year ended 31 December 2000 largely met analysts' forecasts.

Rolls-Royce was expected to announce pre-tax profits of between £390m and £430m.

In 1999, the company reported £368m in underlying profits.

Rolls-Royce attributed some of the profits to its efforts to build its customer base for civil planes engines.

The turnaround follows the company's profits warning last year. For the first time in four years, it said it would no longer report double digit earnings growth in 2001.

More recently, it has successfully secured contracts - such as orders from Singapore Airlines and Virgin - across its divisions.

"Rolls-Royce is well positioned for growth in each of its markets," the company said in a statement.

The company has recently developed its Trent line of aircraft engines, as pictured above.

Job cuts

The profits come on the same day as a group of Rolls-Royce workers stage a demonstration outside the company's headquarters in London.

The workers at the engine maker are protesting against a decision that they say could result in the loss of 1,300 jobs.

Rolls-Royce have been a very successful company with record orders and massive profits

Roger Lyons
MSF Union

In November, Rolls-Royce announced plans that will affect a total of 1,300 skilled engineering jobs at the plant in Ansty, near Coventry.

However, the company says the restructuring could result in fewer than 600 job losses, as some of the positions affected could be moved elsewhere.

The Financial Times reported on Friday that the company is set to cut a 1,000 more jobs than originally announced.

But a spokesman for Roll-Royce denied this, saying that the company has always maintained that up to 2000 jobs a year could be lost globally through "natural wastage".

The job cuts will be over three years as part of a three-year restructuring programme.

Union demo

The group of workers, expected to number about 100, are from the Manufacturing, Science & Finance (MSF) union and work at Rolls-Royce's Ansty plant.

Roger Lyons, general secretary of the MSF union, plans to hand in a petition signed by about 15,000 people.

The petition calls on the company to keep skilled engineering jobs at Coventry.

"Rolls-Royce have been a very successful company with record orders and massive profits," said Mr Lyons.

"That is why we are demonstrating at their decision to axe these jobs in Coventry, because there is no economic case for them to do so."

Strike action

The demonstration follows two strikes held on 9 and 26 February. Nearly 600 workers from Ansty participated.

The plant employs 2,400 workers out of Rolls-Royce's total UK workforce of 30,000.

The union argues that the centre will close primarily because the Canadian government has offered Rolls-Royce a grant to move research on its power station turbines to Montreal.

Rolls-Royce disputes this account and says it is simply concentrating its resources where the markets are.

The company spokesman added that Rolls-Royce would only base part of its energy operation in Canada.