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Rolls-Royce profits take off
 A Rolls Royce aircraft engine under construction. YOUR E-MAIL ALERTSLONDON, England (Reuters) -- British engine maker Rolls-Royce posted a 22-percent rise in underlying profit before tax on Thursday helped by cost reductions and growth in its after-market service business. Underlying profit rose to 324 million pounds ($596.2 million) for the six months to June 30, Rolls said in a statement to the London Stock Exchange. Rolls shares rose 3.02 percent to 432 pence, the biggest gainer on London's FTSE 100 index, which was up 0.56 percent at 0709 GMT. "We have continued to make good progress, despite the challenges of a weak U.S. dollar and increased raw material costs," Chief Executive John Rose said in the statement. Key materials the company uses include titanium and cobalt. Underlying profit before financing costs increased to 345 million pounds, up 12 percent. Sales on an underlying basis rose 9 percent to 3.39 billion pounds, said the company, which makes engines for aircraft and ships as well as turbines for the energy industry. "The Group continues to expect double-digit growth in aftermarket sales for the full year," said Rolls, after a 6-percent rise in the period from a year earlier. Revenues from services made up 54 percent of the total, compared to 55 percent in the same period last year. Its order book rose to 25.1 billion pounds from 23 billion. The company said it proposed a mid-year dividend of 3.67 pence, up from 3.34p for the same period in 2005. Rolls said it had average net cash of 83 million pounds versus average net debt of 377 million in the year-ago period. Rolls competes with GE Aviation and United Technologies Corp. unit Pratt & Whitney in the market for airliner engines. Rose said the company's decision to power the new Airbus A350 XWB model due in 2012 would not throw off the company's research and development (R&D) spending forecasts. "We'll stay within our guidance for R&D as a proportion of sales," Rose told reporters on a conference call, referring to R&D spending guidance of 5 percent of sales. Rolls-Royce builds engines for the current A330 and A340 models, which the A350 is expected to compete against. "Absolutely it is a competitor," Rose said, but declined to comment on the possible negative impact on sales of the Trent 500 engine, for example, sold on longer-range versions of the A340 since 2002. He also declined to comment on what market share Rolls expects the A350 to capture as it takes on the Boeing Co. 787 due for delivery four years earlier than the Airbus. In addition to its own models, Rolls holds a 32.5-percent stake in International Aero Engines (IAE), which makes the V2500 engine used on Airbus single-aisle models such as the A320. Its military activities include a stake in Eurofighter Typhoon combat jet engine consortium Eurojet and one in Europrop, the consortium developing a large turboprop for the four-engined Airbus Military A400M transport plane due in 2009. "We're expecting steady progress for the year in the defense sector," Rose said. 
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