22nd Feb 2024 08:26
(Alliance News) - Jet engine maker Rolls-Royce Holdings PLC on Thursday hailed a "step-change" in performance last year, though it did not return to the dividend list just yet.
Nonetheless, its promising outlook gave the shares a boost. The stock surged 7.2% to 353.30 pence each in London on Thursday morning.
Rolls-Royce reported statutory revenue from continuing operations of GBP16.49 billion, up 22% from GBP13.52 billion in 2022.
It swung to a pretax profit of GBP2.43 billion from a loss of GBP1.50 billion. On an underlying basis, pretax profit jumped to GBP1.26 billion from GBP206 million.
It hailed "record" free cash flow from continuing operations of GBP1.29 billion, markedly above the GBP505 million generated in 2022. It predicts free cash flow between GBP1.7 billion and GBP1.9 billion for 2024.
"Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives. This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures," Chief Executive Tufan Erginbilgic said. "We are managing the business differently and our significant performance improvement in the year reflects the hard work and focused actions of all our teams. We are also continuing to invest to drive future sustainable growth. Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our mid-term targets. We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce."
Installed as CEO at the start of last year, Erginbilgic made waves just days into his stint as CEO after he described the firm as a "burning platform".
The perception of the company in the eyes of investors has improved markedly since his arrival, however.
The shares rose over three-fold last year.
Rolls-Royce had set out medium-term targets back in 2027. For a "2027 timeframe", it is targeting an operating profit between GBP2.5 to GBP2.8 billion, at an operating margin between 13% and 15%. It is also aiming for free cash flow of GBP2.8 to GBP3.1 billion, with a return on capital between 16% and 18%.
It added on Thursday: "Strong progress in the early years of our plan demonstrates a front-end loaded delivery of performance improvement. Our 2023 performance and 2024 guidance on operating profit and free cash flow means that by 2024 we will have delivered more than 50% of the improvement set out in our mid-term targets."
Rolls-Royce did not declare a dividend. It ceased dividend payments in 2020. Its last dividend was a final dividend for 2019.
By Eric Cunha, Alliance News news editor
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