Rolls-Royce is cutting back on costs despite leap of 34%

Rolls-Royce chief executive John Rishton today vowed to clamp down on the engine maker’s high costs, even though the group beat profit expectations in its first-half results.

Profit was up by 34% to £840 million, around £10 million ahead of the average forecast, while revenue increased by 27% to £7.3 billion.

However, cash outflow was more than £460 million in the first six months of the year, a figure that Rishton admitted was “unacceptable”, though the money was used to grow the business.

He added: “It is clear that we have a lot more to do on cost and cash. Fortunately we have significant opportunities to do both, but this will take time and firm resolve to deliver.”

Rolls’ profit increase was on an “underlying” basis; when one-off items and tax were included, the Goodwood-based group in fact swung into a £358 million loss.

However, investors accepted Rolls’ preferred figures as the shares rose 41p, or 3.48%, to 1221p.