Rolls-Royce profit and revenue rise, reiterates FY outlook
Rolls-Royce said on Tuesday that its first-half underlying profit rose nearly 150% as revenue edged up and the aerospace and defence giant reiterated its outlook for the full year
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In the half to 30 June, underlying pre-tax profit was up 148% to £287m, on revenue of £6.9bn, up from £6.1bn.
On a reported basis, the company swung to a pre-tax profit of £1.9bn compared to a loss of £2.2bn in the same period a year ago, as revenue increased to £7.6bn from £6.5bn.
Free cash outflow came in at £339m compared to £414m in the same period a year ago and Rolls said it saw good profit growth in Civil Aaerospace and Power Systems, with Defence remaining steady. However, the marine business continues to face challenging offshore oil and gas markets.
Civil Aerospace revenue was up 14%, while Defence Aerospace revenue fell 4%, Power Systems revenue rose 3%, Marine revenue fell 15% and Nuclear revenue was up 8%.
Chief executive Warren East said: “Rolls-Royce delivered encouraging year-on-year operational progress in the first six months of the year. Civil Aerospace large engine deliveries increased 27% and we made good further progress improving Trent XWB OE economics. Restructuring savings were ahead of plan. Together with a higher than expected benefit from long-term contract accounting adjustments, this resulted in a good set of results, with financial performance ahead of our expectations for the first half.
“Looking to the balance of the year, execution and delivery of a number of important milestones across our businesses will be key to achieving our full year expectations. Our outlook for full year profit and cash remains unchanged."
George Salmon, equity analyst at Hargreaves Lansdown, said: “While the engine may not be roaring just yet, it looks like Warren East has at least got things ticking over at Rolls-Royce.
“The most closely watched figure in these results was the group’s free cash flow. Recent difficulties, which have included weakness in Civil Aerospace servicing and headwinds in the Marine business, have seen cash flow turn negative over the last few years. While it was never likely this would perform a volte-face quickly, a £339m outflow is well ahead of expectations. With cost-cutting continuing, and production of the flagship Trent engines ramping up, there are plenty of reasons for investors to be positive.”
At 1205 BST, the shares were up 8.8% to 971.50p.