Rolls motors as profits hit £475m

SHAREHOLDERS bought into Rolls-Royce, driving the shares up nearly 8% in early trade despite the aero engine maker warning profits in its core division would be halved this year.

The group raised annual profits 9% to £475m, before one-off items. It credited its 'prompt action' following the damage inflicted on the aviation markets by the 11 September terrorist attacks. Rolls-Royce cut about 5,000 jobs, including 3,800 in the UK, in October.

Trading since then had been in line with expectations, and no further job losses were likely. 'We have a good order book and a strong market position,' said chief executive John Rose. 'The restructuring programme is proceeding in line with forecasts.'

Profits in the civil aerospace business were expected to be about half those of 2001, the firm added. But Rolls said its after-markets business was providing support, representing 40% of group sales. Year-end orders were worth £14.5bn, and it was well positioned for a return to profits growth in 2003.

Rolls held the final dividend at 5p a share, to leave the total ahead 2.3% at 8.18p. The stock climbed 13 1/4p to 183 1/4p.