Aircraft engine maker Rolls-Royce disappointed investors by reporting a bigger-than-expected fall in first-half profit, underscoring the challenges its new chief executive faces in trying to restore the health of its civil aviation business.
Shares in the British company, whose engines power the Airbus 350 and Boeing 787, fell 7.5 percent after it said its underlying operating profit fell to 125 million pounds ($152 million) from 307 million pounds a year ago. from a year ago, 24% lower than estimates.
The civil aviation business reported an underlying operating loss of 79 million pounds ($96 million) despite a 43 percent increase in flight hours, a key driver of revenue growth.
Chief executive Warren East, who will step down at the end of the year and be succeeded by a former BP executive, spoke of a £1.1bn improvement in cash flow and strong order intake in the energy systems sector.
It added that cash flow was expected to be “moderately” positive for the full year, following a cash burn of £68m in the first half.
In 2021 the corresponding amount was set at 1.5 billion pounds and in 2020 at 4.2 billion pounds.
East stressed that the company faces problems from higher inflation and supply chain disruption, such as a shortage of processors and finding alternatives to titanium.
“We are actively managing the impact of a range of challenges, including rising inflation and ongoing supply chain disruption, with a greater focus on pricing, productivity and costs,” he said.
Source: Capital
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