ROLLS-ROYCE has reported an increase in profits and a record order book which, it believes, will help it weather the economic storm.

In its preliminary results for the full year, published this morning, (12), the company, which has its civil aerospace and marine divisions in Derby, said its order book increased by £9.6bn to a record £55.5bn, a 21% rise.

Pre-tax profits also increased by 10% to £880m, up from £800m in 2007.

But the company warned that the current global downturn could stall profit growth this year.

However, chief executive Sir John Rose said he was confident that the company was well positioned to weather the storm.

He said: “2009 will be a very difficult year for the global economy.

“The strength of our balance sheet gives us confidence that Rolls-Royce will respond successfully to current challenges and develop the business for the longer term.”

In the past 12 months, Rolls-Royce’s civil aerospace division, at Sinfin, saw a 21% rise in engine orders during 2008, to £4.5bn.

Its marine division, based in Raynesway, Derby, saw orders up 42% in the year to £2.2bn, making it the second-largest Rolls-Royce business after the aerospace arm.

Overall, Rolls-Royce said its sales increased 22% over the year, to £9bn.

But during the last 12 months, Rolls-Royce said it had noticed a significant change in the market caused by the effects of the credit crunch.

It saw weakening demand towards the end of the year and warned the “unprecedented” economic gloom would have an impact on the company, its suppliers and customers.

Last month, Rolls-Royce confirmed that it was to cut up to 240 shopfloor jobs in Derby.

These are on top of 140 job losses it announced for Derby in November.

Rolls-Royce employs 12,500 people in Derby – 10,500 at Sinfin and 2,000 at Raynesway.

Steve Wright, Rolls-Royce works convenor for Unite at the Sinfin factory, said: “While we’re pleased that the company is doing well, it begs the question, why is it still cutting jobs?

“The mood on the factory floor this morning was that this just doesn’t add up.”

Mark King, president of civil aerospace, said: “The company has had to make some difficult decisions. We have always tried to make the tough decisions as early as possible to ensure greater long-term stability.

“I am proud of the way the staff have responded to the challenges and feel encouraged as we move forward.”

Analysts responded well to the results, although shares fell just over 1% today.

Hargreaves Lansdown analyst Keith Bowman said: ‘‘”These are undoubtedly positive results, although uncertainty surrounding the global economy will continue to pressurise the share price.

“‘In essence, Rolls Royce remains a rarity in the British landscape – a successful home grown manufacturing company.”