Engineer Rolls-Royce braced for Brexit turbulence today after shelling out £100 million to keep supply chains running in case of no deal.
The engine maker spent the money on additional warehouse space and inventory build-up to supply its main Derby site.
This means Brexit is “manageable” for Rolls, which supplies engines for planes produced by the likes of French firm Airbus.
Chief executive Warren East said: “We are luckier than a lot of companies because we are not a just-in-time business, we don’t have perishable goods so it’s all manageable. We’re as well prepared as we can possibly be.”
Several other global manufacturers have warned of supply chain disruptions if there are more border checks.
Unlike them, East also said Rolls had so far swerved the fall-out from the US-China trade war, where higher tariffs could threaten global supply chains, saying that the direct impact had been “pretty marginal”.
The additional Brexit inventory cost came on top of a much larger bill Rolls racked up for keeping parts on factory conveyor belts.
Underlying free cash flow, a key measure watched by investors, swung into the red to minus £429 million, a fivefold increase on last year, which sent shares down 12p to 803p.
East said the figure last time was flattered by one-off items. The firm should deliver positive cash flow of £700 million by year end as it has about 50 engines ready to be invoiced.
Rolls also increased the costs associated with Airbus shuttering the A380 plane by one third from £186 million to £245 million.
