5th Aug 2021 08:53
(Alliance News) - Jet engine maker Rolls-Royce Holdings PLC on Thursday posted a swing to first half profit and said it is on track to make over GBP1 billion in cash savings this year.
Rolls-Royce said its revenue in the six months to June 30 slipped 9.1% year-on-year to GBP5.16 billion from GBP5.67 billion. It posted a pretax profit of GBP114 million, swinging from last year's hefty GBP5.21 billion loss.
The company's bottom line was helped by a GBP25 million non-cash profit from a revaluation of its hedge book, compared to a GBP2.6 billion revaluation loss a year earlier.
"Our continued focus on the elements within our control, together with a good performance from Defence and order intake recovery in Power Systems have enabled us to deliver solid progress in the first half. The benefits of our fundamental restructuring programme in Civil Aerospace are evident in our reduced cash outflow and improved operational efficiency," Chief Executive Warren East said.
Rolls-Royce reported negative free cash flow of GBP1.15 billion for the period, an improvement on the outflow of GBP2.80 billion recorded a year ago. It is targeting turning free cash flow positive during the second half 2021, and aims to improve the full-year figure to negative GBP2.0 billion from negative GBP4.2 billion in 2020.
"This leaner cost base together with a strong liquidity position gives us confidence in our ability to withstand uncertainties around the pace of recovery in international travel and benefit from the eventual rebound," CEO East added.
Rolls-Royce highlighted progress in its restructuring plans, with around 8,000 roles cut. The company's aim to cut 9,000 roles and make GBP1.3 billion in run rate savings by the end of 2022 is on track, it added.
"We expect to deliver more than GBP1 billion of savings in FY2021 as compared with FY2019," Rolls-Royce explained.
The company is also targeting at least GBP2 billion in disposal proceeds. On Wednesday, the company confirmed it has entered into discussions with a consortium led by Bain Capital on the potential sale of its ITP Aero business.
Spanish business publication Expansion had reported that Rolls-Royce was to sell its Spanish unit to a consortium including of US investment firm Bain Capital and engineer Sener for EUR1.6 billion.
On Wednesday, Rolls-Royce had said it agreed to sell Bergen Engines to Langley Holdings PLC for an enterprise value of EUR63 million.
The sale followed Rolls-Royce's aborted deal earlier in the year. Citing national security concerns, the Norwegian government blocked a EUR150 million proposed sale of the Bergen unit to TMH Group, a privately owned company headquartered in Russia that makes locomotives and rail equipment.
Last year, Rolls-Royce had said it would seek to raise cash by selling assets after the coronavirus crisis ravaged the company's balance sheet.
Like the first half of 2020, Rolls-Royce did not declare an interim payout.
Shares in the company were 1.7% higher at 106.45 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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