Engineering news
Rolls-Royce has confirmed it is trading in line with expectations despite challenging market conditions.
The company said civil aerospace large engine demand remains strong, reflecting strength of XWB order backlog, but demand for business aviation original equipment has weakened further.
The engineering giant said foreign exchange benefits from weaker sterling and lifecycle cost reductions are expected to more than offset higher engineering and programme costs in civil aerospace.
Rolls-Royce said the outlook in the defence sector remains positive, supported by good aftermarket opportunities.
The company said the power systems markets were mixed, reflecting weaker demand for industrial engines and service, although marine and power generation remain steady.
It said there are no signs of recovery yet in offshore oil & gas markets for marine and offshore engineering order book remains very weak; further revenue weakness expected in 2017.
Meanwhile, the nuclear sector is expected to benefit from improved submarine activity, the company added.
Rolls-Royce said its transformation programme is well on track to achieve upper end of the planned £150-200 million per annum cost saving target.
Chief executive Warren East said: "We have made steady progress in 2016 to date, delivering a ramp up in large engine production and implementing the first stage of our transformation programme.
“Overall, we remain comfortable that our expectations for profit and free cash flow remain achievable."
Rolls-Royce's full year results for 2016 will be published on 14 February 2017.
Meanwhile, Smiths Group, which manufacturers industrial seals, medical devices and security detectors, said its overall performance was in line with management expectations for the three months ended 31 October 2016. Its revenue declined by 3% on an underlying basis. Expectations for the full year remain unchanged.
Since 28 October the company has reduced its net debt, which stood at £983 million, following the divestment of John Crane's Artificial Lift business and Smiths Medical's Wallace franchise.