The Rolls-Royce Holdings PLC (LON: RR) share price surged 23.19% after releasing an unscheduled trading update for the first six months of its financial year. The update saw the company revise its underlying profit target to £660m-£680m versus consensus estimates of £328m.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
The British multinational aerospace and defence company also upped its free cash flow guidance to £340m-£360m, significantly improving from consensus estimates of £50 million. The company also raised its full-year guidance for underlying operating profit to £1.2bn-£1.4bn from consensus estimates of £934m.
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 full-year free cash flows of £0.9bn-£1.0bn, beating consensus estimates of £732m. The company attributed the improved financial figures to its multi-year transformation programme delivering robust initial results.
The company noted that an increased focus on costs and productivity helped offset the impact of inflation and mitigate supply chain pressures. The firm also reported improved revenue growth across all three business divisions: civil aerospace, defence contracting and power systems.
Rolls Royce expects first-half underlying operating profits of about £400m in the civil aerospace division compared to the £79m loss recorded last year. The company also expects its defence division to generate underlying half-year operating profits of £260m compared to last year’s £189m profit.
First-half underlying operating profits in the power systems division remained constant at £120m compared to £119m in H1 2022. The higher profitability in the defence division was due to the strong revenue growth and higher margins.
The increased profitability in the civil aerospace division was primarily driven by higher aftermarket profitability, reflecting the higher volumes and other commercial optimisation actions.
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. Despite a challenging external environment, notably supply chain constraints, we are starting to see the early impact of our transformation in all our divisions. Better profit and cash generation reflects greater productivity, efficiency and improved commercial outcomes.”
*This is not investment advice.
Rolls-Royce (LON: RR) share price.
The Rolls Royce (LON: RR) share price surged 23.19% to trade at 189.47p, from Tuesday’s closing price of 153.80p.
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
