Rolls-Royce cuts profit forecast, blames engine failure

Rolls-Royce Group Plc said it expects full year underlying profit growth to be slightly lower than its prior forecast, blaming engine failure incident on a Qantas A380 super-jumbo flight last week.

This event and the consequent actions will have an impact on the Group's financial performance this year, chief executive Sir John Rose said on Friday.

However, the scale of the company's order book, the global nature of its business and strong balance sheet makes Rolls-Royce a resilient business, Rose said. We expect continued underlying profit growth in 2010.

The enginemaker had earlier expected underlying profit for the full-year to be modestly higher than 915 million pounds ($1.47 billion) it reported for 2009.

In a separate statement, Rolls-Royce said investigations on the engine failure concluded that the issue is specific to the Trent 900. The failure was confined to a specific component in the turbine area of the engine that caused an oil fire, which led to the release of the intermediate pressure turbine disc.

The company said it continues to work closely with the investigating authorities.

The firm, which reported underlying revenue of 10.1 billion pounds in 2009, announced order book stood at 58.4 billion pounds as at June 30, 2010.

The Group will report its results for the 12 month period ending December 31 on February 10, 2011.

Shares of Rolls-Royce closed Thursday's regular trading session at 584 pence on the London Stock Exchange.