Aircraft engine maker Rolls-Royce sees earnings take off
The group posted first half underlying operating profits of £673 million – more than five times the £125 million it reported a year earlier.
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Your support makes all the difference.Engine-maker Rolls-Royce has revealed soaring half-year profits as its turnaround programme gathers pace and amid a bounce-back in international travel.
The aircraft engine manufacturer posted underlying operating profits of £673 million for the six months to June 30 – more than five times the £125 million it reported a year earlier.
On a statutory basis, it swung to a pre-tax profit of £1.4 billion from losses of £1.8 billion a year ago.
The results come a week after Rolls hiked its earnings outlook for the full-year to between £1.2 billion and £1.4 billion this year, up from the previously guided range of £800 million to £1 billion.
The profit cheer sent its shares surging higher on the day, to levels not seen since the start of the Covid-19 pandemic.
It has been benefiting from an overhaul, which saw it cut thousands of jobs following the heavy impact of the pandemic and actions to slash costs and create efficiencies in a bid to improve profits.
Rolls has also seen its key civil aerospace division boosted by a recovery in long-haul travel following the pandemic, which is driving demand from airlines for engine maintenance.
Chief executive Tufan Erginbilgic kicked off another transformation programme at the start of the year, shaking up senior management among other changes.
He said the plan had “started well with progress already evident in our strong initial results and increased full year guidance for 2023”.
But he said there is “more to do” under the programme and it has also been undertaking a strategic review with aims to reveal the findings later this year.
He said: “There is much more to do to deliver better performance and to transform Rolls-Royce into a high performing, competitive, resilient, and growing business.
“We will share the outcome of our strategy review along with medium-term goals for the group in November.”
The company has seen a marked improvement in flying hours by engines from its civil aerospace operation, up 36% in the first half and reaching 83% of 2019 levels.
It also banked 240 large engine orders in the half-year, up from 96 the previous year.
Its civil aerospace division delivered operating profits of £405 million compared with a loss of £79 million a year ago.
The group’s power systems division saw lower profit margins in the first, but Rolls said it expects this to improve in the second half due to pricing actions and cost savings.
Operating profits grew by a third to £261 million in its defence business – which the group said was its most “resilient” division – with the sector benefiting from increased global demand as a result of the war in Ukraine.