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Rolls-Royce Half Year results
Rolls-Royce announced Half Year results on Thursday 1 August 2024.
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Thursday 1 August 2024 07:00 AM
Rolls-Royce Holdings Plc 2024 Half Year Results
01 August 2024
Tufan Erginbilgic, CEO said: “Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is proceeding with pace and intensity. We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing. We are on track to deliver our mid-term targets.
Our strong first half results reflect the continued delivery of our strategic initiatives and a relentless focus on commercial optimisation and cost efficiencies across the Group. These results and our increased financial resilience give us the confidence to raise our 2024 guidance and reinstate shareholder distributions in respect of the full year 2024 results.”
1 Adjusted return on capital is defined on page 46 and is abbreviated to return on capital 2 Subject to final Board recommendation and shareholder approval at the 2025 Annual General Meeting. This applies to all references to the reinstatement of shareholder distributions in this document. A 30-40% payout ratio will be applied to ‘underlying profit after tax’ which is equal to ‘Underlying profit for the period’ 3 All underlying income statement commentary is provided on an organic basis unless otherwise stated. A reconciliation of alternative performance measures to their statutory equivalent is provided on pages 43 to 46
The success of our transformation programme and strategic initiatives is evident in our financial performance in the first half of 2024. We have made good progress, and there is still more to do. Our strategic framework is founded on four pillars:
These strategic initiatives and our transformation programme are expanding the earnings and cash potential of the business.
Following a strong first half delivery across all divisions, we are raising our full year 2024 guidance. This reflects the continued execution of our strategic initiatives, notably commercial optimisation and cost efficiencies, and is despite the impact of prolonged supply chain challenges.
Our updated free cash flow guidance for full year 2024 includes a £150-200m cash impact related to the supply chain, where parts availability remains constrained. We anticipate a continued impact to free cash flow for a further 18-24 months as supply chain challenges persist. We are actively managing these challenges and seek to mitigate the costs.
Our 2024 free cash flow guidance is based on civil net LTSA creditor growth at the low end of the mid-term range (£0.8bn - £1.2bn), compared to £1.1bn in 2023. In Civil Aerospace, we continue to expect 2024 large EFHs will grow to 100-110% of 2019’s level, 500-550 total original equipment (OE) deliveries and 1,300-1,400 total shop visits.
Strong progress in the early years of our plan demonstrates a front-end loaded delivery of performance improvements. Our 2023 performance and 2024 guidance on operating profit and free cash flow means that by the end of 2024 we expect to deliver more than 75% of the profit and more than 65% of the free cash flow improvement set out in our mid-term targets. As a reminder, our mid-term targets are underlying operating profit of £2.5-2.8bn, an operating margin of 13-15%, free cash flow of £2.8-3.1bn and return on capital of 16-18%. These targets are based upon our expectations for a 2027 timeframe.
Our results presentation will be held at UBS, 5 Broadgate, London EC2M 2QS and webcast live at 10:30 (BST) today. Downloadable materials will also be available on the Investor Relations section of the Rolls-Royce website: https://www.rolls-royce.com/investors/results-and-events.aspx
To register for the webcast, including Q&A participation, please visit the following link: Rolls-Royce 2024 Half Year Results - webinar.net
Please use this same link to access the webcast replay which will be made available shortly after the event concludes. Photographs and broadcast-standard video are available at www.rolls-royce.com
Enquiries:
This results announcement contains forward-looking statements. Any statements that express forecasts, expectations and projections are not guarantees of future performance and will not be updated. By their nature, these statements involve risk and uncertainty, and a number of factors could cause material differences to the actual results or developments. This report is intended to provide information to shareholders, is not designed to be relied upon by any other party, or for any other purpose and Rolls-Royce Holdings plc and its directors accept no liability to any other person other than under English law.
LSE: RR.; ADR: RYCEY; LEI: 213800EC7997ZBLZJH69
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