Engineer Rolls-Royce fought off the weak US dollar and rising to cost to grow profit for 2007 by 13%.

The underlying £800 million earnings reflected increased trading profits at all businesses including civil aerospace and marine, the company said.

It faced a further 8% deterioration in the US dollar rate in 2007 - at a cost of £92 million - as well as increased operating costs.

Chief executive Sir John Rose described conditions as 'challenging' but said the company's order book increased by 76% to a record £45.9 billion, with the Asia and Middle East order book more than doubling to £20 billion in 2007.

The company's unit costs rose 7% in 2007, reflecting higher material costs, disruption due to facility moves and cost escalation among suppliers. Rolls Royce said it was hopeful of achieving a reduction in the rise in unit costs of between 2% and 4% during 2008.

Shares in the group fell 4% to 463p on the results announcement.