Rolls-Royce Holdings Boosts Guidance After 1st Half Beat -- Earnings Review
02 August 2018 - 11:33PM
Dow Jones News
By Adria Calatayud
British aircraft engine maker Rolls-Royce Holdings PLC (RR.LN)
reported first-half results on Thursday. Here's what you need to
know:
UNDERLYING PROFIT: Rolls-Royce swung to an underlying pretax
profit of 73 million pounds ($95.8 million) compared with a loss of
GBP143 million in the year-earlier period after an adjustment to
reflect new accounting standards. This compares with forecasts of
an underlying pretax loss of GBP3 million, according to a consensus
based on three analysts' estimates provided by FactSet. The company
also reported a swing to a pretax loss of GBP1.26 billion compared
with a profit of GBP1.44 billion a year before, reflecting
accounting adjustments on currency hedges.
REVENUE: The company increased first-half revenue to GBP7.49
billion, from GBP6.66 billion in the first half of 2017. This
exceeded analyst forecasts of GBP6.59 billion, according to a
FactSet-provided consensus based on a roundup of six analysts.
WHAT WE WATCHED
GUIDANCE: Rolls-Royce boosted its outlook for the year saying
that both cash flow and underlying operating profit would be at the
higher end of its guidance range. Chief Financial Officer Stephen
Daintith said that would put profit at between GBP400 million and
GBP500 million and cash flow at GBP450 million to GBP550
million.
Investors cheered the company's upbeat outlook and shares at
1247 GMT were up 5.6% to 1,043 pence.
TRENT 1000: Problems with Rolls-Royce's Trent 1000 engines,
which power Boeing Co. (BA) 787 Dreamliners and Airbus SE (AIR.FR)
A380 superjumbos, dragged on the first-half performance and will
continue to do so over the next two years, the company warned.
Rolls-Royce booked a GBP554 million charge related to those
issues in the first half. Cash costs to fix the engines will reach
GBP450 million both this year and in 2019 and will amount to around
GBP350 million in 2020, Rolls-Royce said.
RESTRUCTURING: The company said it has achieved positive early
progress on its latest restructuring plan. The company plans to cut
4,600 jobs over two years with the aim of reaching annual savings
of GBP400 million by the end of the program.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
August 02, 2018 09:18 ET (13:18 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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