Rolls-Royce reported a 57% rise in underlying operating profit on Thursday, saying its turnaround plan was already underway and progressing rapidly.
Britain’s Rolls-Royce on Thursday beat expectations for a 57% rise in underlying operating profit to 652 million pounds ($787 million) in 2022, supported by better performance in civil aerospace and electrical systems.
The new chief executive of Britain’s Rolls-Royce plc forecasts greater profit growth in 2023, saying the engineering company was able to ‘do more’ after beating expectations last year, sending shares soaring by 19%.
Tufan Erginbilgic, who has only been on the job for two months, says major improvements are needed to secure the future of Rolls-Royce, one of Britain’s best-known industrial brands, which makes engines for Airbus A350 and Boeing 787 aircraft.
Rolls-Royce reported a 57% increase in underlying operating profit on Thursday, saying its turnaround plan was already underway and progressing rapidly.
“While our performance improved in 2022, we are capable of much more,” Erginbilgic, a former BP executive, said, promising to improve efficiency and commercial outcomes.
Strong results and an upbeat outlook pushed shares of Rolls-Royce up 19% in early trade to 129 pence, their highest level in more than a year. The company reported an operating profit of 652 million pounds ($786.4 million) in 2022, beating analysts’ forecast of 478 million pounds, thanks to improved performance at its largest division, the aviation, as travel recovers from the pandemic.
The results of the strategic review will emerge in the second half of the year, Rawls said, in which case he plans to provide medium-term goals as the new boss seeks to leave his mark on the company.
With early benefits from the transformation, Rolls expects an underlying operating profit of 0.8-1.0 billion pounds in 2023 and free cash flow of 0.6-0.8 billion pounds
Rolls-Royce’s underperformance compared to peers such as engine manufacturer GE is a long-standing problem.
Erginbilgic’s predecessor Warren East tried to boost profitability and began a turnaround in 2018 before the pandemic forced it to restructure again two years later, this time to avoid a slump in revenue when flights are stopped.
Shares of Rolls-Royce have risen 15% since Jan. 1 ahead of Thursday’s results, boosted by the prospect of its engines flying longer after China reopens its borders.
