Rolls wins $1bn engines deal
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Your support makes all the difference.ROLLS-ROYCE HAS secured its largest single order to supply engines for ships in a deal worth $1bn (pounds 662m), after it saw off US rival GE to kit out five transatlantic cargo ships.
The win will boost the historic British engineering group, which lost a $25bn Boeing contract to GE, its US rival, last month.
John Rose, chief executive, said the deal to supply 25 engines to Philadelphia- based FastShip would generate $1bn in sales from manufacturing and 20- year service contracts. However, payments from the deal would only match expenditure on developing the engines up until the ships start trials in 2002. Mr Rose declined to indicate the level of profit the deal represented for the group. "We should receive the first cheque at the end of this year or early next," he said.
FastShip proposes to fill the gap between air-freight and shipped cargo. Rolls-Royce is to adapt its Trent engine, currently used in aeroplanes and the most powerful gas turbine available for maritime use, for the project.
"In many cases of air-freight, people are paying a premium when they don't necessarily want a premium service. At the same time, existing seafreight is too slow," said Mr Rose.
FastShip has already earmarked a shipping route between Philadelphia and Cherbourg in France.
The vessels will be capable of travelling at 40 knots, enabling FastShip to offer a seven day door-to-door North Atlantic network for the transport of high-value, time-sensitive goods at a cost in line with conventional shipping.
Analysts were unimpressed by the deal. Zafar Khan of SG Securities said: "These are not huge numbers."
Meanwhile, Rolls-Royce said there was a possibility of further job losses in the second half in addition to the 500 in its US operations announced earlier in the summer. It shed 700 staff in the first six months of the year.
The group posted first-half pre-tax profits up 18 per cent at pounds 159m on sales up from pounds 2.099bn to pounds 2.104bn.
Mr Rose said the group was on track to deliver double-digit annual earnings growth, aided by its cost-cutting drive. It expected to sell its materials handling business, put up for sale last year, within eight months. The shares closed down 8.5p at 248.25p.
Investment, page 19
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