The Rolls-Royce Holdings PLC (LON: RR) share price fell 4.11% after issuing a trading update for the period up to 30 April 2023. The company faced challenges managing its supply chain as original equipment and aftermarket services volumes increased, especially in Civil Aerospace.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
The company makes a significant proportion of its revenues from the civil aviation sector, so it is good to hear that demand in this segment is increasing. As a result, the firm reiterated its underlying operating profit guidance of £0.8-£1.0 billion and free cash flow guidance of £0.6-£0.8 billion in 2023, which remained unchanged.
Top Broker Recommendation
- XTB UK regulated by the FCA – Read our Review
- Admiral Markets More than 4500 stocks & over 200 ETFs available to invest in – Read our Review
- BlackBull 26,000+ Shares, Options, ETFs, Bonds, and other underlying assets – Read our Review
- eToro Wide range of instruments available to trade – Read our Review
- IG Top-tier regulation – Read our Review
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
Rolls-Royce expects to generate most of its free cash flows in H2 2023. In the civil aerospace division, the company noted that long-term service agreement large engine flying hours (EFH) were 83% of 2019 levels in the four months to 30 April. Therefore, as earlier predicted, the company was on track to reach its 80% to 90% target for the entire year.
The conglomerate noted that the volume of shop visits and OE deliveries were on track to meet expectations. In addition, the company continues to win new business, winning its biggest-ever order of Trent XWB-97 engines during the period via an MoU for 68 engines (plus 20 options) for Air India.
Rolls-Royce kept making good progress in its defence business, with its nuclear reactors being chosen to power the AUKUS submarine programme. In the United States, Bell's V-280 Valor aircraft, powered by RR’s AE1107F engines, cleared the protest period, allowing its teams to progress to the next phase, with the first aircraft entering into service in 2030.
Within its power systems business, revenue growth was driven by demand for aftermarket services and exceptionally high order intake in the past year, especially for power generation solutions.
The company noted that it was getting better pricing on new orders, which is driving up margins, with the benefits expected to start showing in the second half of the year. The firm has experienced strong demand from marine customers, including an order for Series 4000 gensets for the U.S. Navy's Constellation Class frigate programme.
*This is not investment advice.
Rolls-Royce (LON: RR) share price.Â
The Rolls-Roye (LON: RR) share price fell 4.11% to trade at 149.20p, from Tuesday’s closing price of 155.60p. Â
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
