Rolls-Royce posts falling underlying profit

British aircraft engine maker Rolls-Royce said on Thursday that underlying profit fell by a fifth on the back of a weaker performance by its defence and marine businesses.
Underlying pre-tax earnings sank to £644 million ($1.09 billion, 811 million euros) in the six months to June 30.
That compared with £804 million a year earlier, Rolls-Royce said in a results statement.
"Results for the first six months of 2014 are consistent with our guidance, reflecting the expected reduction in our defence business and weaker trading in marine, as well as adverse foreign exchange," said chief executive John Rishton in the earnings release.
Sales fell 9.7 percent to £6.63 billion. Full-year sales are expected to be broadly similar to the £15.5 billion seen in 2013.
The group added however that it rebounded into net profit of £544 million in the reporting period. That compared with a loss of £385 million last time around when the result was skewed by one-off provisions.
Rolls-Royce is a leading provider of engines for airliners, and demand for planes by airlines is booming.
"We expect significant improvement in profit for the second half driven by higher revenue and cost reduction," added Rishton on Thursday.
"While there are challenges, we maintain our full-year guidance for the group."
In May, Rolls-Royce had shocked investors when it issued a profits warning at its marine division, which has been beset by production problems, and forecast flat earnings and revenues for this year.
In June, Rolls-Royce outlined plans to return £1.0 billion to investors via a share buyback after the sale of its energy production arm to Germany's Siemens. The divestment is expected to complete at the end of 2014.
Meanwhile in Paris, rival aero-engine maker Safran reported that net profit fell by 4.0 percent in the first half to 632 million euros but this was skewed by the fact that the equivalent figure last year had been boosted by a capital gain of 131 million euros.
The company said that activity had been "strong" in the first half of the year mainly because of the strong demand for airliners, and it raised its outlook for operating profit for the whole of this year, looking for an increase of nearly 15.0 percent from 10.0 percent expected previously.
Shares in Safran were up 1.92 percent to 45.75 euros in mid-morning trading, in an overall French market which was down 0.50 percent.