REG - Rolls-Royce Holdings - Trading Update

Rolls-Royce HoldingsAnnouncement

07/11/2024 07:00

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RNS Number : 2648L  Rolls-Royce Holdings plc  07 November 2024

7 November 2024

 

ROLLS-ROYCE HOLDINGS PLC TRADING UPDATE

 

 

Rolls-Royce Holdings plc announced today its trading update to 31 October
2024. Chief Executive Tufan Erginbilgic said:

 

"Our transformation of Rolls-Royce into a high-performing, competitive,
resilient and growing business continues with pace and intensity. Continued
good performance year to date gives us further confidence in the delivery of
our 2024 guidance despite a supply chain environment which remains
challenging. We are also making good progress towards our mid-term targets,
with a front-end loaded delivery of profit and cash flow improvements. There
is more we still need and want to do, as we expand the earnings and cash
potential of Rolls-Royce."

 

Trading update to 31 October 2024

 

Our current trading is in line with our expectations and the Full Year 2024
guidance provided on 1 August 2024 of underlying operating profit between
£2.1bn and £2.3bn and free cash flow between £2.1bn and £2.2bn remains
unchanged. We continue to strengthen our balance sheet. This has been
recognised by the ratings agencies, all of which now hold us at an investment
grade rating, and all with a positive outlook.

 

In Civil Aerospace, demand remains strong across business aviation and
widebody. Large engine flying hours grew by 18% year-on-year to 102% of 2019
levels for the 10 months to 31 October 2024. Our expectations for the full
year 2024 of large engine flying hours at 100-110% of 2019 levels, 500-550 OE
deliveries and 1,300-1,400 shop visits remain unchanged. Recent engine orders
include 60 Trent 7000 engines by Cathay Pacific and an order for Trent 1000
engines by EL AL Airlines. We continue to target FAA certification of the
improved HPT blade for the Trent 1000 TEN in the coming months, which will
more than double the time on wing of the engine. In addition to our £1
billion time on wing investment programme we are continuing to invest to
increase our MRO capacity for major shop visits by 2030 to support future
aftermarket growth. In October, the Pearl 10X successfully completed its
flying test bed campaign, an important milestone in the Falcon 10X flight test
programme ahead of its entry into service in 2027.

 

In Defence, demand remains strong with significant progress across key
platforms. In August, the next phase of testing began on the F130 engine in
Indianapolis, another step towards delivering the United States Air Force
B-52J Stratofortress. In August, the Future Long Range Assault Aircraft
(FLRAA) programme for the U.S. Army entered the Engineering and Manufacturing
Development (EMD) phase of the acquisition process, the final phase before
production commences. Work has also commenced for prime contractor SNC on the
Survivable Airborne Operations Center (SAOC) programme.

 

The aerospace industry supply chain remains challenged. However, we continue
to work with focus and intensity across our supply chain to support growing OE
and aftermarket volumes. We have concentrated our efforts on 15 suppliers,
where our interventions have driven performance improvements.

 

In Power Systems, Power Generation and Governmental continue to deliver strong
revenue growth supported by robust order intake. In Power Generation,
double-digit revenue growth was driven by data centres where demand for backup
systems remained high. Governmental order and revenue growth was also strong
across both land and naval end markets. Marine orders included a bridge to
propeller contract with Azimut Benetti Group, and we strengthened our
footprint in China with the expansion of the joint-venture MTU Yuchai Power.
We continue to progress towards our sustainability and net-zero targets with
an agreement with Lürssen to collaborate on yacht refits with the latest
technologies and we commissioned the first Liberty Lines high-speed ferry with
hybrid systems. In September, we achieved a significant milestone in the
development of the first new mtu engine platform in more than 20 years, with
the engine being tested to full power. This new engine will set new standards
in the industry for power density and efficiency, creating additional value
for our customers and supporting them in their transition to a lower carbon
future.

 

In Rolls-Royce SMR, we were named in September as the preferred supplier for
the construction of Small Modular Reactors by the Government of the Czech
Republic and the Czech State utility, ČEZ Group. This is enabled by a
strategic investment by ČEZ into Rolls-Royce SMR and an exclusive commitment
to deploy up to 3GW of electricity in the Czech Republic. In the UK
Government's competition, Rolls-Royce SMR was shortlisted as one of four
potential SMR providers. We remain the only company in Step 3 of the Generic
Design Assessment, around 18 months ahead of the competition in the regulatory
process.

 

In September, we also agreed to sell our Naval Propulsors & Handling
business to Fairbanks Morse Defense. As previously announced, in the first
half of 2024 we completed the sale of our Direct Air Capture assets and, in
July, we completed the sale of the lower-power-range engines business of
Rolls-Royce Power Systems AG to Deutz AG. In September, we made the decision
to close Rolls-Royce Electrical's Advanced Air Mobility activities.

 

We are working at pace on our Transformation Programme to further embed and
accelerate cultural change across the business. In July, our new
organisational design came into effect, which creates a leaner, more focused
organisation with fewer layers. In September, we gifted all our employees with
150 shares in Rolls-Royce and we also launched our new purpose and behaviours
across the organisation. Our workforce is excited and energised by our
Transformation and the progress we are making.

 

2024 Full Year results

 

Our 2024 Full Year results are due to be announced on 27 February 2025. As
outlined at our 2024 Half Year results, we are reinstating shareholder
distributions in respect of the 2024 Full Year results starting at a 30%
pay-out ratio of underlying profit after tax, with an ongoing pay-out ratio of
30-40% each year thereafter.

 

 

For further information, please contact:

 

Investors

Jeremy Bragg

Head of Investor Relations, Rolls-Royce plc

Tel +44 (0) 7795 840875

Jeremy.Bragg@Rolls-Royce.com (mailto:Jeremy.Bragg@Rolls-Royce.com)

 
Media

Richard Wray

Director of External Communications & Brand, Rolls-Royce plc

Tel +44 (0) 7810 850055

Richard.Wray@Rolls-Royce.com (mailto:Richard.Wray@Rolls-Royce.com)

About Rolls-Royce Holdings plc

1.  Rolls-Royce develops and delivers complex power and propulsion solutions
for safety-critical applications in the air, at sea and on land. Our products
and service packages enable our customers to connect people, societies,
cultures and economies together; they meet the growing need for power
generation across multiple industries; and enable governments to equip their
armed forces with the power required to protect their citizens.

2.  Rolls-Royce has customers in more than 150 countries, comprising more
than 400 airlines and leasing customers, 160 armed forces and navies, and more
than 5,000 power and nuclear customers. We are committed to making our
products compatible with net zero carbon emissions to meet customer demand for
more sustainable solutions.

3.  The annual underlying revenue was £15.41 billion in 2023, and the
underlying operating profit was £1.59 billion.

4.  Rolls-Royce Holdings plc is a publicly traded company (LSE: RR., ADR:
RYCEY, LEI: 213800EC7997ZBLZJH69)

www.rolls-royce.com (http://www.rolls-royce.com)

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