7th Nov 2024 10:10
(Alliance News) - Rolls-Royce Holdings PLC said on Thursday that it is on track to meet its 2024 guidance, despite ongoing supply chain challenges in the aerospace industry.
Rolls-Royce shares fell 4.4% to 548.82 pence on Thursday morning in London.
The London-based manufacturer, which supplies aero-engines to the aerospace and defence sectors, reaffirmed its expectations for an underlying operating profit in the range of GBP2.1 billion to GBP2.3 billion for the year. It would represent an increase of up to 45% from GBP1.59 billion in 2023.
In the Civil Aerospace division, demand remains strong, with large engine flying hours up 18% year-on-year for the 10 months to October 31. The company expects large engine flying hours for 2024 to be between 100% and 110% of 2019's pre-pandemic level.
Rolls-Royce also maintained its forecast for free cash flow in the range of GBP2.1 billion to GBP2.2 billion for 2024, a rise of up to 71% from GBP1.29 billion in 2023.
In Defence, Rolls-Royce reported robust demand, with significant progress made across key platforms.
While acknowledging the ongoing supply chain difficulties in the aerospace industry, Rolls-Royce said it continues to focus its efforts on working with 15 key suppliers to mitigate disruptions.
Rolls-Royce is set to announce its full-year results for 2024 on February 27.
The company confirmed its plans to reinstate shareholder distributions, targeting a payout of 30% of underlying pretax profit for 2024, with a target payout ratio of 30% to 40% thereafter. The last time Rolls-Royce paid a dividend was in January 2020, before the pandemic took hold.
"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," Chief Executive Tufan Erginbilgic said.
By Eva Castanedo, Alliance News reporter
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