ROLLS-ROYCE saw profits rise 12 per cent this year and said it expected a further increase in 2004.

The jet engine maker, which has an aerospace equipment manufacturing and repair plant in Sunderland, as well as sites in Bristol, Coventry and Derby, said underlying pre-tax profits before one-off items in the year to December 31 came in at £285m against £255m last time.

Although the group's order intake last year was seven per cent lower than 2002 at £8.1bn, its firm and announced order book still moved nine per cent higher to a record £18.7bn.

Rolls said lucrative aftermarket maintenance services accounted for 50 per cent of group sales during the year, standing at £2.8bn against £2.5bn previously.

The group has cut its workforce by 19 per cent, or 8,300, to 35,200 since 2001 following the downturn in air travel after the September 11 terrorist attacks in the US.

It said yesterday that it had completed that programme, although it pledged to continue to cut costs by rationalising its facilities and restructuring its supply chain, but it did not give details.

Chief executive Sir John Rose said the group expected a gradual recovery from the current depressed civil aerospace market to begin during the next two years.