Rolls-Royce Posts $1.9 Billion Loss

Aircraft engine manufacturer on Thursday reported a full-year loss of $1.9 billion, as unfavorable currency fluctuations offset a strong gain in revenue.

LONDON (AP) -- Aircraft engine manufacturer Rolls-Royce PLC on Thursday reported a full-year loss of 1.34 billion pounds ($1.9 billion), as unfavorable currency fluctuations offset a strong gain in revenue.

The loss in 2008 compared to a profit of 606 million pounds in 2007, the company said.

The company said it expected underlying profit to be broadly flat in 2009.

Revenue was up 22 percent to 9.1 billion pounds, but the company absorbed an accounting loss of 2.5 billion pounds because it had to adjust the value of foreign currency hedging instruments it carries on its books. That was due to the sharp drop of the pound against the dollar and the euro.

The charges don't affect the company's cash position and "do not, therefore, reflect the underlying trading performance of the group in 2008," Rolls Royce said.

Operating profit excluding currency impact and other financing costs was 862 million pounds, up 68 percent.

Rolls-Royce said its order book increased 21 percent to a record total of 55.5 billion pounds.

"2009 will be a very difficult year for the global economy," said Chief Executive Sir John Rose.

"Our current view is that in 2009 underlying revenues will continue to grow, with underlying profits remaining broadly similar to those achieved in 2008," he added.

Rolls-Royce shares were up 1.7 percent at 320.75 pence on the London Stock Exchange.

"The group's financial position remains strong and investors continue to enjoy a progressive dividend payment," said Keith Bowman, analyst at Hargreaves Lansdown Stockbrokers.

"Management continues to deserve credit for both the current business model and retaining faith in the virtues of manufacturing. On balance, despite evident success, the extremely uncertain outlook leaves the current market consensus opinion neutral in tone," Bowman said.

Rolls-Royce PLC makes engines for military and civilian aircraft as well as power generation systems and marine propulsion systems. It is different from the maker of luxury cars, which is owned by German automaker BMW AG.

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