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Rolls-Royce Holdings PLC on Wednesday said financial results for the first half of 2023 and for the full year will be materially above market consensus.
Its shares jumped 22% in response to 186.25 pence in early trade in London.
The London-based jet engine and power plant manufacturer said it expects to report underlying operating profit of £660 million to £680 million, well above consensus of £328 million and £125 million in the first half of 2022. Free cash flow is estimated at GP340 million to £360 million, versus consensus of £50 million and negative £77 million a year before.
Rolls-Royce explained that this reflects improved margins, led by its Civil and Defence arms, thanks to higher volumes, ‘commercial improvements’, and cost savings. Margins in Power Systems narrowed in the first half but are expected to improve in the second half, the company said, on the back of price hikes.
Rolls-Royce upped its full-year expectations in response to the strong firs half. It now expects underlying operating profit of £1.2 billion to £1.4 billion in 2023, versus consensus of £934 million, and free cash flow of £900 million to £1.0 billion, versus consensus of £732 million. These compare to underlying operating profit of £652 million and free cash flow of £505 million in 2022.
Chief Executive Tufan Erginbilgic said: ‘Our multi-year transformation programme has started well with progress already evident in our strong initial results and increased full year guidance for 2023. There is much more to do to deliver better performance and to transform Rolls-Royce into a high performing, competitive, resilient, and growing business.’
Full half-year results will be released on August 3.
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