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Highlights
- According to figures released on Thursday, 23 February, London-listed aviation manufacturer Rolls-Royce registered a pretax loss of £50 billion.
- The company registered a record £652 million of underlying profit last year.
- The demand for large engine flying hours in civil aerospace grew 35% yearly.
Rolls-Royce Holdings PLC (LON: RR) shares started on a bright note on Friday, 24 February, as the Lon: RR share traded upwards after the full-year revenues and profits figures were released. On 24 February, the Rolls-Royce share price was trading at GBX 134.70, rallying by 1.20% at market opening.
Rolls-Royce boasted a market cap of £ 11,137.27 million with an EPS (earnings-per-share) of 0.01 at the time of writing. The RR stock surged by 43.84% and 13.78% on a YTD and one-year basis, respectively.
According to figures released on Thursday, 23 February, London-listed aviation manufacturer Rolls-Royce registered a pretax loss of £1.50 billion ($1.81 billion) against the pretax loss of £294 million in 2021. The underlying pretax profit of Rolls-Royce was £206 million compared with £36 million a year prior.
Rolls-Royce said the firm registered a record £652 million underlying profit last year. This was about 238 million higher than in 2021 and much higher than some analysts had forecasted.
Meanwhile, Rolls-Royce hinted that the demand recovered in 2022 amid international travel demands. The piqued interest was on the back of increased demand for large engines. The company said that the demand for large engines has grown by 35% in the year, and the order intake in power systems grew 29% to £4.3 billion.
Rolls-Royce CEO promises transformation program will produce results
Rolls-Royce CEO Tufan Erginbilgic highlighted that the transformation program is currently underway, and once completed, it will improve the company's efficiency. Erginbilgic further pointed out they have chalked out a plan to deliver a sustainable reduction in working capital before adding that the success will help the company reward investors.
Meanwhile, Rolls-Royce also mentioned that it will not be making shareholder payments for the year 2022 financial year. However, without specifying any timeline, the management added that it would return to investment grade credit rating and resume the practice.
|
£ million |
Underlying 2022 |
Underlying 2021 |
Statutory 2022 |
Statutory 2021 |
|
Revenue |
12,691 |
10,947 |
13,520 |
11,218 |
|
Operating Profit |
652 |
414 |
837 |
513 |
|
Operating Margin (%) |
5.1% |
3.8% |
6.2% |
4.6% |
|
Profit/(loss) before taxation |
206 |
36 |
(1,502) |
(294) |
|
Earnings/(loss) per share (pence) |
1.95 |
0.11 |
(14.24) |
1.48 |
*data from Rolls-Royce Holdings Plc 2022 Full Year Results
Bottom line
With China reopening its borders, Roll-Royce is optimistic about a positive 2023. Rolls-Royce has, in fact, been projecting a steady recovery path and further increases to returns in 2023. RR has issued an operating profit guidance between £0.8 billion and £1 billion and a fresh cash flow outlook of £0.6 to £0.8 billion. Rolls-Royce assumes that this year the large engine's flying hours will increase by 80-90% of 2019's level with 1,200-1,300 total shop visits.
