Rolls-Royce, the British maker of aircraft engines, rebounded into profit during the first half of 2011, aided by a record order book despite defence spending cutbacks in Britain, it said on Thursday.

Net profit hit 842 million pounds ($1.4 billion, 960 million euros) in the six months to the end of June, after a post tax loss of 334 million pounds in the same period of last year, Rolls-Royce announced in a results statement.

Revenue eased one percent to 5.36 billion pounds, but the group's order book climbed four percent to a record 61.4 billion pounds in the reporting period.

Underlying pretax profit meanwhile jumped to 595 million pounds from 465 million pounds last time around.

Rolls-Royce added that underlying earnings were given a 60 million pound boost from contract termination settlements in the wake of the British government's strategic defense and security review (SDSR).

The group meanwhile announced that it would hike its shareholder dividend by eight percent to 6.9 pence per share.

"Performance in the first half of the year was strong with our order book and underlying profit showing solid growth, enabling an increased payment to shareholders," chief executive John Rishton said in the earnings release.

"This demonstrates the resilience of our strategy that is based on a diverse portfolio and access to global markets," added Rishton, who became chief executive in April with John Rose stepping down after 14 years in charge.

In late morning trade, Rolls-Royce shares gained 0.16 percent to 642.50 pence on London's FTSE 100 index of leading companies, which was 0.70 percent lower.

Rolls-Royce is the world's second-largest maker of commercial and military jet engines after US giant General Electric Co.

But it has been hit by the British government's decision last October to shrink the armed forces and scrap key assets as part of a major defence review that formed part of stinging public sector cuts to slash a record deficit.

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