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UPDATE 2-Rolls-Royce beats forecasts as it ramps up production

* H1 profit and cash beat forecasts

* Ramping up production of civil aircraft engines

* Keeps full-year forecasts

* Shares hit two-year high (Adds CEO quotes, analyst reaction, shares)

LONDON, Aug 1 (Reuters) - Rolls-Royce beat first-half profit forecasts on Tuesday after delivering 27 percent more aircraft engines and higher maintenance revenue.

The British maker of engines for aircraft and ships reported an underlying pretax profit of 287 million pounds ($379 million), up 148 percent from a year earlier and beating market forecasts of 193 million.

Rolls shares rose by as much as 8 percent to a two-year high of 957.5 pence after its earnings report.

Chief Executive Warren East is rebuilding Rolls-Royce after a record annual loss last year, hurt by a bribery fine, a weaker British pound and falling revenue from older engine programmes.

He is cutting costs, shortening manufacturing times and investing in new engines that will increase the size of its fleet and associated servicing revenue in the next decade.

East said the company had beaten expectations in profit and cash in the first half.

"That was due to a good performance from civil aerospace, there was an increase there in revenue, particularly from our in-service fleet," he told reporters.

"We've made good progress but there's still a lot to do and I'm telling people this is no time for complacency."

The company is doubling production of its large civil aircraft engines, led by the Trent XWB for the long-range Airbus A350. It aims to capture half of the market by 2020.

It said it had an order book of more 2,700 large civil aircraft engines, which reflects an average five years of production including six years of cover for the Trent XWB family.

The profit, however, comes from long-term service contracts with airlines.

East said the company had reduced the loss it is making producing the engine as early launch pricing came to an end and it improved manufacturing efficiency.

Analysts at Jefferies said a better-than-expected cash performance of negative 339 million pounds against their expectation of negative 585 million was reason enough for "a moment of exuberance".

East, however, said the company needed to continue to ramp up of civil engine production and new product launches.

Its marine engines business, which accounts for 8 percent of revenue, was still loss-making, and revenue in defence aerospace fell 4 percent, although lower overheads improved profit.

East said the company was sticking to its full-year outlook calling for a modest performance improvement overall and similar free cash flow to the 100 million pounds achieved in 2016.

He said adjustments in long-term contract accounting and a better performance in it power systems unit had come through quicker than expected, but it was also producing a lot more of the engines on which it books a loss.

"Put all those together, we are pretty comfortable keeping the outlook as its stands," he said.

($1 = 0.7573 pounds) (Editing by Kate Holton and Jason Neely)