Rolls-Royce has taken a hit of £56m sterling due to safety issues with the Trent 900 engine used to power the Airbus A380 superjumbo, the British company said today.
The fallout partly impacted the group's annual net profit, which slumped 73% to £480m. Rolls-Royce was largely hit in 2010 by exceptional accounting charges, it added in an earnings statement.
Rolls-Royce said the 2010 profit figure compared with income after tax of £1.799 billion in 2009 and added that the Trent 900 problem may result in 'a modest level of additional costs' for the company in 2011.
Its underlying performance was strong however, as Rolls reported better than expected pre-tax profits thanks to a buoyant order book. Pre-tax profits climbed 4% to £955m in 2010, while revenue gained 6% to £11.08 billion. Analysts had expected pretax profit of £945m and revenue of £10.90 billion.
'The strong order book and balanced portfolio gives us confidence that the group will double revenues organically over the next decade,' Rolls said.
The company's results are the last to be presented by long-serving chief executive John Rose, who retires at the end of March. 'During 2011 the group expects good profit growth and a modest cash inflow,' Rose said today. He joined Rolls-Royce in 1984 and has been chief executive since 1996.
Rolls was rocked in November after one of its Trent 900 engine caught fire in mid-air, forcing an Airbus superjumbo flown by Australian airline Qantas to make an emergency landing.
Rolls-Royce has said that failure of a 'specific component' caused the oil fire, which led Qantas to temporarily ground its six A380s. The mid-air engine blast on November 4 sent shards of metal raining down on an Indonesian island and punched a hole in the wing of a Singapore-Australia flight.
'Each time a serious incident happens, Rolls-Royce and the aviation industry learn lessons. These are embedded in the rigorous certification requirements, safety procedures and standards of regulation which make flying an extraordinarily safe form of transport,' the company said today.
