Rolls-Royce swings to small profit, maintains 2021 targets
Updated : 22:52
Aircraft engine maker Rolls-Royce swung to an interim profit as it continued to cut costs and looked to turn cash-flow positive during the second half of the year.
The company on Thursday reported pre-tax profits of £114m compared with a £5.2bn loss last year when the Covid-19 pandemic virtually grounded air passenger travel. Underlying operating profit came in at £307m from a £1.6bn loss in 2020.
Rolls-Royce also maintained guidance given in March for free cash outflow to be £2 billion pounds for the fiscal year. However, it warned that the slow aviation recovery would affect its 2022 target.
"We have already seen a return to 2019 levels of flying activity for our business aviation engines and for large engines operated on domestic flying routes. However, international travel is recovering more gradually, hindered by global variation in vaccination rates and ongoing travel restrictions. We are continuing to mitigate this through the actions within our control," Rolls-Royce said.
Chief executive Warren East said the focus on cost cuts and disposals together with a good performance from the firm’s defence division and order intake recovery in its power systems unit “enabled us to deliver solid progress in the first half”.
“The benefits of our fundamental restructuring programme in Civil Aerospace are evident in our reduced cash outflow and improved operational efficiency,” he said.
“This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound.”
Rolls-Royce has targeted raising £2bn from disposals to bolster its balance sheet and on Wednesday said it was in exclusive talks with a buyer for its Spain-based ITP Aero unit for a reported €1.6bn.
Large engine flying hours came in at 43% of pre-pandemic levels in the January-June period, only a slight improvement from the 40% recorded in the first few months of the year, the company added.