LONDON, May 12 Reuters RollsRoyce traded in line with expectations in the first four months of the year, the engine manufacturer said on Thursday, helped by a gradual return to flying and increased government investment in defence.

The British company reiterated its forecasts and set a mediumterm outlook for its civil aerospace division, saying it expected underlying revenue growth at a low doubledigit percentage compound average growth rate from 2021 and an operating margin percentage in the high single digits.

It expects trading cashflow to comfortably exceed operating profit.

Rolls has been hit hard by the pandemic because a large chunk of its revenue is tied to the number of hours its engines are flown by its airline customers.

In its civil aerospace unit, flying hours in its large engine longterm service agreement were up 42 on the prior year, with passenger demand recovering where COVID restrictions have eased.

In defence, it said the products it provided were delivered and maintained over decades, meaning they are not exposed to individual geopolitical events. However it said that increased government spending underpinned the longterm growth outlook.

The company, which is searching for a replacement for Chief Executive Warren East, also said it was also working with suppliers across its different divisions to limit disruption.

Our longterm sourcing agreements and hedging policies designed to limit volatility in raw material inflation, give some nearterm…