Rolls-Royce’s financial performance is improving, the company announced on May 11, ahead of its annual general meeting (AGM) taking place the same day.
The company said the improvement has been “driven by our transformation programme workstreams and good end market demand for our products and services”, meaning that its likely financial performance for 2023 remains “in line” with expectations of £0.8-£1.0bn operating profit guidance and free cash flow guidance of 0.6-£0.8bn, which were announced in February, with cash flow generation expectations leaning toward the second half of the year.
However, it warned that “supply chain management remains a key operational challenge for us as original equipment and aftermarket services volumes increase, especially in civil aerospace”.
The sector’s long term service agreement large engine flying hours (EFH) were at 83% of 2019 levels for the four months to the end of April, putting the company “on track for the 80% to 90% range for the full year” and in line with expectations also aired in February.
The company said shop visit volumes and OE deliveries are also on track with expectations, pointing to its continuing to win new business, including a “biggest ever order of Trent XWB-97 engines” by Air India, which in Q1 2023 signed a memorandum of understanding with Rolls-Royce for 68 engines and 20 options.
“We are transforming Rolls-Royce into a high quality and competitive business with a strong balance sheet and growing profit, cash flows and returns,” chief executive Tufan Erginbilgic said.
“We are already benefitting from the actions we are taking as well as recovery and growth in our end markets. We announced several changes to the executive team in March to support the transformation, adding leaders with proven track records of delivery and high-performance,” Erginbilgic added.
