AERO-ENGINE maker Rolls-Royce today reported a 76 per cent fall in half-year profits before tax as the company spent £120million developing new ways of cutting emissions.

For the six months to June 30, pre-tax profits at the group, which employs 1,000 at its Barnoldswick site, were £38million, against £159million in the same period last year.

But stripping out the £120 million one-off cost, operating profits across the group rose to £214million, from £169million.

Chief executive John Rose described the £120million investment in cutting engine emissions as a "positive move" that would allow Rolls-Royce to meet tough new regulations.

Group sales for the six months rose 33 per cent to £2.80billion, from £2.10billion. The company shed 3,000 jobs worldwide this year and expects to lose a further 2,000 during 2001, half of which will come through natural wastage, said Mr Rose.

But earlier this month union leaders said that a strong order book means there will be no compulsory redundancies at Rolls-Royce's Barnoldswick plant in the latest round of countrywide job cuts.

Around 120 out of the 152 job losses announced there had already been already been met through staff taking voluntary redundancy.

The civil aerospace division saw sales of £1.50 billion, against £1.17billion, while on the defence side of the business sales were at £698million, against £542million.

The interim dividend for shareholders was set at 3p, up from 2.7p the time before.