The new chief executive of Britain’s Rolls-Royce forecast more profit growth in 2023 after last year beat expectations, and said the engineering company was capable of “much more” as his transformation plan starts to take shape.
Tufan Erginbilgic, who is just two months into the job, has said that major improvements are needed to secure the future of Rolls-Royce, one of Britain’s most famous industrial names, which makes engines for Airbus A350 and Boeing 787 planes.
As Rolls-Royce announced a 57 per cent rise in underlying operating profit today, he said his transformation programme was already underway and moving at pace.
“While our performance improved in 2022, we are capable of much more,” Erginbilgic, a former BP executive, said, promising to improve efficiency and commercial outcomes.
The company posted operating profit of £652 million (US$786.4 million) for 2022, beating an analyst forecast of £478 million, helped by an improving performance in civil aerospace, its biggest division, as travel recovers from the pandemic.
The outcome of a strategic review would come in the second half of the year, Rolls said, when it planned to provide medium-term goals, as the new boss seeks to put his stamp on the company.
For 2023, Rolls guided to underlying operating profit of 0.8-1.0 billion pounds and free cash flow of 0.6-0.8 billion pounds, helped by the early benefits of the transformation.
Rolls-Royce’s underperformance versus peers such as engine-maker GE has been a longstanding issue.
Warren East, Erginbilgic’s predecessor, had tried to lift profitability, launching a turnaround in 2018, before the pandemic two years later forced another restructuring, this time to rescue it from the collapse in revenues when flying stopped.
Shares in Rolls-Royce are up 15 per cent since Jan. 1, outperforming Britain’s bluechip index which is up 6 per cent, with the stock boosted by the prospect of its engines flying more hours now China has reopened its borders. — Reuters
