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Rolls-Royce claims good progress on restructuring

Strong demand for the Rolls-Royce Trent XWB engine is underpinning demand in the manufacturer’s civil aerospace division, despite a further weakening in the business aviation sector.

Rolls-Royce says its outlook for the full year remains “unchanged” in a trading update ahead of a capital markets event on 16 November.

It says it expects transactional foreign-exchange benefits from weaker UK currency and life-cycle cost reductions will “more than offset” higher engineering and programme costs in the civil aerospace operation.

The company’s restructuring efforts – including “significant” changes to senior management headcount and its cost base – are “well on track” to achieve savings in the upper end of its £150-200 million ($187-250 million) target, with the full savings forecast to benefit Rolls-Royce’s 2018 performance.

Rolls-Royce is predicting a £50 million benefit this year with incremental savings of £90-120 million in 2017, adding that exceptional costs this year are unchanged at £75-100 million.

Chief executive Warren East says the company has made “steady progress” this year, and delivered a ramp-up in production of large engines.

“Overall we remain comfortable that our expectations for profit and free cash-flow remain achievable,” he adds.

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