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Rolls-Royce Holding Plc Just Keeps Getting Better

2013 has been a great year for Rolls-Royce (LSE: RR) (NASDAQOTH: RYCEY.US). The engine maker’s shares rose 39p (3.3%) to 1,209p on Friday, after it said that it expected “modest growth in underlying revenue and good growth in underlying profit, with cash flow around breakeven” for the year.

Rolls-Royce shares rallied strongly in the first half of this year, and have been broadly flat for the last few months, but today’s gain mean they are up nearly 40% for 2013 as a whole.

According to Reuters, investors see the company as a potential winner from the predicted doubling in the number of passenger jets over the next 20 years. Today’s share price rise puts the company of a forward P/E of around 18 times, with an estimated dividend yield of 2%.

Among the group’s divisions, there were mixed fortunes reported in this brief trading update, with an upgrade in expected profits for Defence Aerospace but a downgrade in Marine. Given the cutbacks in US defence spending, the lift from Defence Aerospace looks to have been well received by the market.

Rolls-Royce also highlighted recent Airbus orders from Japan Airlines and Lufthansa, that will both use its Trent XWB engine, and that its Trent 1000 engine “powered the successful first test flight of the Boeing 787-9, the second member of Boeing’s 787 Dreamliner family”.

Plans to address the mid-size aircraft market (120-230 passengers) are on hold, however, with a new joint venture with United Technologies Corp put on ice due to the current regulatory environment.

In Marine, Rolls-Royce has been selected to design the propulsion system for the Royal Navy’s Type 26 Global Combat Ship – this ship was very much in the news earlier this week, due to the decision over the future of shipyards here in the UK.

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> Stuart does not own any company mentioned above.