Rolls-Royce guidance intact as it deals with engine trouble

Rolls-Royce said its expectations for 2018 were unchanged after reorganising spending to offset costs for extra inspections of its Trent 1000 engines.

In a statement before its annual general meeting the FTSE 100 engine maker said 2018 had started well and that trading was in line with expectations.

In April Rolls-Royce said it would carry out extra inspections of the Trent 1000 Package C engines because of cracking and corrosion in the engine’s compressor and turbine blades. It had already earmarked at least £300m over two years for repairing the engines, which are fitted on 380 planes.

Rolls-Royce said in April it would rejig discretionary spending to offset extra costs. In its AGM statement it said it had done so and that its financial targets were intact for the year.

Chief executive Warren East will tell the meeting: “I am pleased to report that the year has started well and that trading is in line with our expectations.

“While the requirement for more regular inspections will lead to higher than previously guided cash costs, in response to this we have reprioritised various items of discretionary spend to mitigate these incremental cash costs. Accordingly, we are maintaining our profit and cash expectations for 2018."

East said the company was making good progress on its simplification programme after agreeing to sell its L’Orange fuel injector business in April for €700m to Woodward of the US. East has cut costs, consolidated businesses and stripped out layers of management since taking over at Rolls-Royce in 2015 after a series of profit warnings.