Rolls-Royce back on track as it looks to ‘future-proof’ itself
DERBY engineering giant RollsRoyce is back on track as it looks to “future-proof” its business from suffering any further huge downswings like the one caused by Covid.
The firm’s city-based jet engine arm suffered drastically during the global pandemic as worldwide air travel plummeted.
The company as a whole went from making annual profits in the billions to huge losses, like the £3.1 billion lost in 2020. It has only just climbed back into profits in the tens of millions, after profits of £124 million for 2021 were announced in February.
The firm, which is confident about the medium-term prospects of its Sinfin-headquartered civil aerospace division, has announced it is looking at investing in areas besides standard jet work, in a bid to avoid future peaks and troughs in performance and profits.
On Wednesday, it revealed it is setting up a new nuclear engineering academy in Derby and is looking for 200 youngsters for its first intake of apprentices starting in September. The training centre is backed by the Nuclear Advanced Manufacturing Research Centre, which is building a £15 million research facility at Infinity Park.
And yesterday, departing chief executive Warren East laid out plans which will hopefully help the firm emerge from the pandemic as a “better balanced and more resilient” business. Mr East, who is stepping down later this year, is confident the manufacturing giant has a “sustainable future” after predicting it will “achieve positive profit and cash” this year.
He was speaking in the firm’s latto est trading update, ahead of addressing shareholders at the company’s annual general meeting. Mr East said: “As a result of the actions we have taken, we have made significant progress on the path to recovery from the impact of Covid-19 and are emerging as a better balanced and more resilient business, focused on the long-term business opportunities presented by the global energy transition.” The business traded in line with expectations in the first four months of the year, helped by a gradual postpandemic return to flying. It said engine flying hours for the first four months of 2022 were 42% higher than the year before.
The company said passenger demand for flying was recovering on routes where travel restrictions have been lifted, such as in Europe and the Americas, but additional Covid19 restrictions had resulted in fewer flights in China where the situation was still evolving. The engineering firm said it was “continuing to capitalise” on new opportunities in 2022.
Earlier this month, Australian airline Qantas confirmed it was investing in a dozen Rolls-Royce-powered Airbus A350-1000s for the launch of its first non-stop flights between London to Sydney and Melbourne. The airline has ordered 12 of the new planes – powered by Trent XWB-97 engines made in Derby – which are capable of flying half way around the world without needing to land.
Rolls-Royce has cut nearly 9,000 jobs from its global workforce since the pandemic hit. It has also already announced plans to sell off four of its ancillary businesses, two of which were sold in 2021. The sales are expected to generate around £2 billion for the company.
Mr East said: “We are confident that we have positioned the business achieve positive profit and cash this year, driven by the benefits of our cost reductions.”
In the update, Rolls-Royce also confirmed it was working closely with its supply chain to limit the impact of disruption caused by global uncertainties such as the war in Ukraine. Around 20% of the company’s titanium supplies come from Russia, but the engineering firm has been stockpiling for months in preparation. At the end of February, the company decided to pause all activity with its Russian airline customer Aeroflot.
Rolls-Royce’s next scheduled trading update is on August 4, when it will publish its half-year results.