Rolls-Royce expects to see weaker returns from its civil aerospace business through the end of next year as it transitions production from established, more profitable engine programs to turbofans for newer airliners. Announcing a 57 percent drop in pre-tax group profits for the first half of 2015, the UK-based engine maker highlighted declining demand for the Trent 700 turbofan for the existing A330ceo airliner. It also pointed out that pricing for engines on new airliners, such as the A330neo, tends to be lower in order to attract launch customers. At the same time, the costs associated with new engines are higher as at the earlier stages of the new airliner programs.
For the first six months of 2015, Rolls-Royce’s civil aerospace order book increased in value by 5 percent over where it stood at the end of 2014 to reach £66.4 billion ($103.5 billion). A big factor in this improvement was the April 2015 decision by Emirates Airline to select the Trent 900 engine for its latest batch of A380 widebodies. Underlying civil aerospace revenues grew by just 2 percent during the first half of this year to reach £2 billion ($3.1 billion) and underlying profits before financing charges and taxes were down 27 percent at £432 million ($673 million). The company emphasized that in the longer term increased production rates of its newer engines (including the Trent 1000, Trent XWB and Trent 7000) will significantly expand its market share and boost its aftermarket earnings.