Defence aerospace
£2,123mUnderlying revenue 2010
£309mUnderlying profit 2010
"We are well positioned to secure growth from emerging economies"
Dan KortePresident – Defence Aerospace
Highlights
- TP400 engine approaching 3,000 test flying hours
- F-35B achieved first vertical landing
- Adour engine order worth £200 million from India
- Service business worth £1.5 billion secured
Key financial data
| 2006 | 2007 | 2008 | 2009 | 2010 | |
|---|---|---|---|---|---|
| Underlying revenue £m | 1,601 +13% |
1,673 +4% |
1,686 +1% |
2,010 +19% |
2,123 +6% |
| Underlying profit before financing £m | 193 +7% |
199 +3% |
223 +12% |
253 +13% |
309 +22% |
| Net assets £m | 20 | (172) | (197) | (345) | (523) |
Other key performance indicators
| 2006 | 2007 | 2008 | 2009 | 2010 | |
|---|---|---|---|---|---|
| Order book £bn | 3.2 -3% |
4.4 +38% |
5.5 +25% |
6.5 +18% |
6.5 0% |
| Engine deliveries | 514 | 495 | 517 | 662 | 710 |
| Underlying service revenues £m |
853 | 877 | 947 | 1,046 | 1,103 |
| Underlying service revenues % |
53 | 52 | 56 | 52 | 52 |
| Percentage of fleet under management |
11 | 11 | 12 | 16 | 18 |
Rolls-Royce is the world’s second largest provider of defence aero-engine products and services, with 18,000 engines in service for 160 customers in 103 countries. Our engines power aircraft in all sectors: transport, combat, reconnaissance, training, helicopters and unmanned aerial vehicles.
There continues to be pressure on defence spending in our key markets in Europe and the US. However, our broad product portfolio and strong service and support position on many of the new and established defence aircraft programmes have continued to provide protection against the changes in defence spending by these important customers. We still see growth opportunities in these markets and, in addition, we are well positioned to secure growth from emerging economies in Asia, the Middle East and South America.
Transport
Rolls-Royce consolidated its position as a world leader in the transport market as our AE 2100 engine for the Lockheed Martin C-130J transport aircraft continued to register orders with existing customers, such as the US Air Force, while the global fleet expanded with the Indian Air Force taking delivery of its first aircraft.
The Airbus A400M military transport aircraft enjoyed a year of flight test success with its TP400 engines achieving more than 3,000 flying hours and completing the final bench test requirements, thereby clearing the path to certification.
In 2011, we expect to begin flight testing with the US Air Force for the certification of the T56 engine enhancement kit for the C-130. This will provide significant fuel savings, a substantial improvement to engine reliability and improved hot day/high-altitude performance over the existing engine fleet.
Combat
In the combat sector our twin contributions to the Lockheed Martin F-35 programme continue to make significant progress in the test phase. The unique short take-off and vertical landing (STOVL) Rolls-Royce LiftSystem® powered the F-35B variant aircraft to its first vertical landing in March 2010. It is now ready for Initial Service Release in advance of the first customer deliveries to the US Marine Corps, scheduled for 2011.
The F136 engine programme for the F-35 Joint Strike Fighter has continued to illustrate the benefits of its advanced design and technologies, which are uniquely tailored for the requirements of the aircraft. Six production-standard F136 engines have been tested during 2010 and the programme is making excellent progress on the path to first flight.
Trainers
In India, the Government placed an order for a second tranche of Adour-powered Hawk Advanced Jet Trainers, worth up to £200 million.
Helicopters
In the helicopter market we were awarded a multi-million dollar contract by the US Army to design and develop a dual-channel, full authority, digital engine control (FADEC) for the M250-powered OH-58 Kiowa Warrior helicopter. We also received the US Army Kiowa Warrior Supplier Excellence Award.
In addition, the LHTEC CTS800 engine, which powered three first flights in 2009, achieved the milestone of 50,000 in-service flying hours.
Services
The success of our services business continued in 2010, attracting major contracts worth around £1.5 billion. Among these was an extension of the long-term support for the RB199 engines powering the UK’s Tornado fleet, and MissionCare™ contracts to provide availability-based engine support for V-22 Osprey transport aircraft and the C-130J in service with the US. The US Navy again renewed its support agreement for Adour F405 engines in the T-45 Goshawk trainer. The Canadian Air Force’s AE 2100 engines are now also part of the MissionCare fleet.
Future
We continue to make good progress on the US Air Force Adaptive Versatile Engine Technology (ADVENT) demonstrator programme. It is designed to reduce fuel consumption significantly, enabling extended mission ranges and loiter times. In December, we completed the fan rig tests and work continues in preparation for the core and engine demonstrator phases of the programme.
Our Unmanned Air Systems portfolio was further increased by the roll out of the BAE Systems Taranis technology demonstrator powered by the Adour engine. We continue to invest in performance improvements of established fleets such as the Northrop Grumman Global Hawk which is powered by our AE 3007.
Despite the budget cuts in traditional geographical markets, the defence business has the opportunity to compete in a global market potentially worth around US$430 billion over the next 20 years. Many of our customer requirements for the next ten years are already contracted and there are key export opportunities for programmes across all market sectors.
