2nd Aug 2018 08:59
LONDON (Alliance News) - Rolls-Royce Holdings PLC said Thursday it swung to a loss in the first half of the year after issues with its Trent 1000 engines, but upgraded its earnings outlook as the engineer presses ahead with its restructuring drive.
In the six months to June 30, Rolls-Royce recorded a GBP1.26 billion loss, swinging heavily from a GBP1.44 billion profit the year before.
Of this, a GBP554 million came from an exceptional charge on the Trent 1000 engine, which was incurred due to in-service issues. The charge represents 40% of expected Trent 1000 costs to 2022.
The company also recorded a GBP683 million loss following a fair value adjustment on derivatives and foreign exchange movements. In the corresponding period, Rolls-Royce made a GBP1.68 billion profit from adjustment.
The last significant feature in the company's loss was an exceptional GBP179 million charge incurred from restructuring.
In terms of revenue, Rolls-Royce made GBP7.49 billion in the first half of 2018, a 12% increase from GBP6.66 billion in 2017, due to growth in its civil aerospace and power systems businesses.
The company issued new guidance for it core business, which excludes operations either sold or held for sale. It expects underlying profit in a range of GBP350 million and GBP550 million and an underlying free cash flow of between GBP300 million and GBP500 million.
In June Rolls-Royce Holdings said it would cut around 4,600 jobs, predominantly in the UK and mainly corporate and support roles, as part on a new business restructuring plan to save GBP400 million per annum by end of 2020.
"Our new business structure and drive for greater pace and simplicity, combined with our growing installed base, means we are well placed to exceed free cash flow of GBP1 billion by 2020 and push towards our mid-term ambition for free cash flow per share to exceed GBP1," said Rolls-Royce Chief Executive Warren East.
Shares in Rolls-Royce were up 5.0% at 1,034.00 on Thursday morning.
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