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Staff examine a Rolls-Royce Trent 1000 turbofan engine
Rolls-Royce has had problems with its Trent 1000 turbofan engine that will cost it billions of pounds. Photograph: Justin Tallis/AFP/Getty Images
Rolls-Royce has had problems with its Trent 1000 turbofan engine that will cost it billions of pounds. Photograph: Justin Tallis/AFP/Getty Images

Rolls-Royce to stockpile parts in case of hard Brexit

This article is more than 5 years old

Aerospace firm will also move some regulatory approvals to Germany amid political turmoil

British aerospace firm Rolls-Royce is pressing ahead with plans to stockpile parts and move some regulatory approvals to Germany as it prepares for a possible hard Brexit.

Rolls-Royce on Wednesday said it is in talks with the European Aviation Safety Agency to transfer design regulatory approvals for large jet engines away from the UK. The company already deals with German regulators for business jet components.

Aerospace manufacturers in the UK face the prospect of their regulatory permissions on safety standards being invalidated in EU countries if there is no Brexit deal.

Rolls-Royce said the transfer was a “precautionary and reversible technical action”, and added that no jobs are expected to move as a result.

The manufacturer, which has its headquarters in London but has operations across the UK, said it had begun to “build inventory as a contingency measure”, in line with previously announced plans, in a trading update ahead of full-year results in February. Rolls-Royce said it had “the required capacity” to deal with a no-deal Brexit after speaking to suppliers and reviewing operations.

The company said: “We will continue to implement our contingency plans until we are certain that a deal and transition period has been agreed.”

Political uncertainty caused by Brexit has come as the FTSE 100 manufacturer carries out a restructuring of its business. Warren East, chief executive, seeks to cut layers of middle management in an effort to boost profitability and in June it announced 4,600 job cuts across its 55,000-strong global workforce.

East joined Rolls-Royce in 2015 from ARM, the British chipmaker, inheriting a company embroiled in scandals including a bribery charge covering six countries, which they settled for £671m.

On Wednesday Rolls-Royce reiterated earlier guidance that profits from core operations for the full financial year would be in the upper half of a range of £350m to £550m.

The guidance was in spite of disruption caused by “supply chain issues”, as well as problems with turbine blades on the new Trent 1000 engines that have grounded multiple Boeing 787 planes and that will cost Rolls-Royce billions of pounds.

Rolls-Royce’s share price rose by more than 4.5% on Wednesday after the trading update.

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