Rolls-Royce’s chief executive claimed yesterday that its new strategy is “moving at a pace” and financial performance has improved.
Tufan Erginbilgic, when he first arrived in January, compared the engineering group with a ” Burning Platform”, and said that the performance of the company was unsustainable. He said that the company’s financial performance is in line with expectations from the February full-year results.
He said: “We are turning Rolls-Royce from a low-quality, uncompetitive business into one with a competitive edge and a solid balance sheet that generates growing cashflows, profits and returns.” “We have already benefited from our actions, as well as the recovery and growth of our end markets.”
Rolls-Royce customers are located in over 150 countries. This includes more than 400 airline and leasing customers, more than 160 armed forces, navies, and more than 5,500 power and nuclear clients.
Erginbilgic (63), a former BP executive and chief executive, succeeded Warren East in January.
In an update on its trading for the period ending April 30, the group stated that its “transformation program workstreams” were responsible for the improvement, as well as the good demand from the market. Rolls cut thousands of jobs following the pandemic, and launched a Transformation Programme aimed at boosting profits.
The company’s guidance for the full year on operating profit remains unchanged, between £800m and £1bn. Free cashflow is expected to range from £600m to £800m.
It reported that its civil aerospace division – which supplies engines to Airbus A350 planes and Boeing 787 aircraft – had reported a continuing recovery in flying hours. The number of hours flew reached 83 percent in the first quarter and is on track to reach the 80 to 90 percent range for the entire year.
The company reported that it continues to win new business. This includes a record-breaking order for Trent XWB97 engines from Air India. It comprises 68 engines with 20 options.
In the US, it has moved on to the next phase in its program to replace Black Hawk helicopters by the Bell V-280 Valor. The Rolls-Royce AE1107F engine will power the new helicopter due to enter service by 2030.
The company stated: “The transformation programme is progressing at a rapid pace.” “Our increased focus on simplification and efficiency is helping us to keep costs low and has already identified some savings.”
The company said that its strategic review was on track, and that it would be able to communicate the results and medium-term goals in the second half.
Rolls-Royce’s shares, which have risen more than 80 percent in the last year, fell 10 1/4p or 6.6% to close at 146p.