Rolls-Royce motoring along nicely under new leadership
ROLLS-ROYCE says that its turnaround under new chief executive Tufan Erginbilgic is “moving at pace” and that it is on track to meet its full-year targets.
Speaking at the engineering giant’s annual shareholder meeting, Erginbilgic said his cost-cutting and efficiency business simplification plan is already starting to bear fruit, as well as more diligent approach to investment.
Additionally, the company’s defence division has been buoyed by contract wins such as the AUKUS submarine programme and the V-280 Valor, which is being developed for the US Army as the long-term replacement for the Black Hawk helicopter.
Rolls-Royce’s biggest business is building and servicing aircraft engines and Erginbilgic said the division’s recovery is accelerating along with the post-pandemic recovery in air travel. Engine flying hours were at 83 per cent of 2019 levels in the first quarter and are expected to get to between 80 per cent and 90 per cent by the end of the year.
As a result, Rolls-Royce expects to hit its target of operating profits of up to £1billion for its 2023 financial year.
He said: “We are transforming Rolls
Royce into a high quality and competitive business with a strong balance sheet and growing profit, cash flows and returns. We are already benefitting from the actions we are taking as well as recovery and growth in our end markets. We are making good progress.”
Erginbilgic, a former BP executive, was parachuted into Rolls-Royce earlier this year to lead its turn around. He said the group was in the “last chance saloon” and that all the investments it had made previously had “destroyed value”.
Victoria Scholar, head of investment at broker Interactive Investor, said that Rolls-Royce shares have rallied more than 50 per cent amid optimism that Erginbilgic will restore its fortunes. However, they have a long way to go before they recover all the ground they have lost over the past five years.
She said: “Rolls-Royce is the FTSE 100’s best performing stock over the past six months, although it is still trading at less than half of its value from its 2018 peak and is giving back some of those gains today.”