|Order book (£bn)||47.0||43.5|
|Underlying revenues (£m)||4,481||4,502|
|Underlying services revenues (£m)||2,626||2,726|
|Underlying profit before financing (£m)||493||566|
The Civil aerospace business made considerable progress in 2009 with major technical and commercial milestones achieved on a number of programmes. However, volatile trading conditions and the continuing effects of major programme delays impacted performance. The civil portfolio benefits from having a large, broad-based and relatively young fleet of engines which helped mitigate some of the consequences of the global downturn in the period.
Three new Rolls-Royce powered civil aircraft flew for the first time during 2009. The Boeing 787, Gulfstream G650 and the Embraer Legacy 650 all completed first flights and will enter service progressively over the next three years further expanding the portfolio, market share and underpinning long-term growth.
The order book grew to £47bn at the end of 2009 with orders totalling £9.4bn in the year. This included contracts and announcements for 178 V2500 engines and 236 Trent engines for the Trent 700, Trent 1000 and Trent XWB programmes, including new customers from Turkey, Ethiopia and the US.
The Trent 700 and Trent XWB passed important programme milestones during the year, with each achieving orders of more than 1,000 engines. It is significant that the new Trent XWB has taken just five years to reach this landmark, a quarter of the time it took the Trent 700 to achieve this level of orders. The Trent order book now includes more than 2,400 engines across six programmes – most due for delivery in the next 5~10 years. This order book, together with more than 1,600 engines delivered in the previous 15 years, underpins the long-term growth of the civil fleet over the next decade.
The trading environment remained difficult throughout 2009. Reduced flying hours, deferred support requirements by our customers and the continuing effects of delays to major new airframe programmes impacted segments of the aerospace market differently. However, revenues were stable at £4.5bn for the year, demonstrating the resilient characteristics of the portfolio.
Total engine deliveries for the year were 844, 143 lower than in 2008. There was a shift in mix towards Trent engines for the widebody and away from the corporate and regional sector. A record 224 Trent engines were delivered in the year with strong growth of the Trent 700 for the Airbus A330 underpinning a record year. In the narrow-body market the V2500 remained resilient with deliveries of 347 units, similar to 2008. This included the delivery of the 4,000th engine on this programme over the past 25 years. Corporate and regional deliveries were 39 per cent lower at 272 engines. Despite delivering fewer engines in 2009, the delivered installed thrust, at 25 million lbs, was similar to 2008. The move to larger engines supported an increase of four per cent in original equipment revenues.
An increasing proportion of new engine deliveries include long-term service contracts (TotalCare™ and CorporateCare™). More than 90 per cent of the last three years of Trent engine announcements include TotalCare. Today 76 airlines, including 40 of the top 50, benefit from our TotalCare proposition. These contracts are an important driver of long-term service revenue growth and give us greater visibility of future workloads. These trends continued in 2009 and supported further growth in revenues from engines operated under long-term contacts. However, service revenues from engines maintained on more discretionary time and material arrangements were lower in 2009. This reflects customer actions to delay non-essential maintenance activities reducing the number of engine overhauls and the scope of service. As a consequence, overall service revenues declined by four per cent compared to 2008.
The total number of parked aircraft remained stable over 2009 at around 2,700. Of these around 465 were powered by Rolls-Royce. The main Rolls-Royce programmes affected were the fleet of AE3007 powered Embraer 135 and 145 type regional aircraft, with around 100 powered by Rolls-Royce.
Reduced R&D charges, increased fee income from Risk and Revenue Sharing Partners (RRSP’s) and favourable foreign exchange effects were more than offset by a weaker original equipment mix, reduced services revenues and increased unit costs. This resulted in lower reported margins and profits in the period.
Air travel and airfreight remain at subdued levels. Although there are some signs of improvement in traffic, the sustainability of these trends is uncertain.
In 2010 further detrimental mix changes in revenues are expected as new programmes commence delivery with the consequent impact of launch costs. Services revenues are expected to increase by around ten per cent in 2010, partly benefiting from improved foreign exchange achieved rates. Increased charges from R&D are expected because of the higher activity levels associated with these early phase programmes, such as the Trent XWB. Improved GBP~USD achieved rates will help mitigate some of these effects.
As a result underlying profits are expected to be modestly lower in 2010 than in 2009.