The Rolls-Royce Holdings PLC (LON: RR) share price fell 3.4% after releasing its half-year results. The company’s underlying revenues surged to £6.95 billion compared to H1 2022, when the revenues were £5.31 billion. The firm’s underlying operating profits rose significantly to £673 million from £125 million in 2022.
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The British multinational aerospace and defence company revealed that its improved profitability was primarily driven by continued revenue growth and some early transformation benefits. The company’s civil aerospace division led the profitability as its operating margin rose to 12.4% compared to the previous figure of 3.4%.
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Rolls-Royce noted that aftermarket profitability and increased large spare engine sales drove higher civil aviation profits. The company also revealed that cost efficiencies and the optimisation of its commercial operations played a critical role in the increased profitability.
Investors' lacklustre reaction to today’s half-year financial results can be attributed to the recent surge in Rolls-Royce shares after the company updated investors about its operations and finances on Wednesday, 26 July 2023.
Rolls-Royce generated more robust cash flows, with free cash flows from continuing operations coming in at £356 million compared to an outflow of £(68) million in the previous period. The firm’s long-term service agreement (LTSA) balance change of £727 million compared to 2022’s £433 million reflected the large EFH (engine flying hour) growth to 83% of 2019 levels.
The firm’s financial performance reflected the improved end markets driven by the early benefits of transformation and rigorous performance management.
Tufan Erginbilgic, the Rolls-Royce CEO, 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 transform Rolls-Royce into a high-performing, competitive, resilient, and growing business. We will share the outcome of our strategy review along with medium-term goals for the Group in November. Our people are committed, passionate and full of energy. Despite a challenging external environment, notably supply chain constraints, we are starting to see the early impact of our transformation in all our businesses.”
Rolls-Royce (LON: RR) share price.
The Rolls-Royce share price fell 3.40% to trade at 178.35p, from Wednesday’s closing price of 184.63p.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.