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(Alliance News) - Rolls-Royce Holdings PLC on Thursday said it continued to recover, saying that volatility in interest rates and currencies have had no material impact on cash flows and that order intake increased from a year ago.
The London-based aerospace and defence company said it received record order intake in its Power Systems arm in the past four months.
Meanwhile, in Civil Aerospace, large engine flying hours in the four months that ended October 31 were up 36% for a year ago. They were 65% of pre-pandemic 2019 levels during the recent period and are 62% of pre-pandemic in the year to date, Rolls-Royce said.
Rolls-Royce said the recent volatility in interest rates and foreign exchange rates has had no material impact on its underlying cash flows or financial year 2022 guidance.
"We do not anticipate raising drawn debt for near term loan refinancing. Our transactional foreign exchange exposure is fully covered by our hedge book in the medium term and our UK defined benefit pension scheme is well funded, hedged and collateralised and we do not anticipate making any cash contributions to the scheme in the foreseeable future," the company added.
In the Defence division, Rolls-Royce reported "robust demand", securing USD1.8 billion in contract renewals and repricing covering the next five years. Rolls-Royce expects a low double-digit percentage operating margin in the Defence unit in 2022 and in the medium-term due to a planned growth in investment in new defence programmes.
The company expects 2022 revenue growth in Defence to be "modest" as legacy spare parts sales in 2021 will not repeat, and it will see "no material benefit from the increase in government defence budgets in the near term due to our long product cycle".
Meanwhile, Rolls-Royce said it managed to repay its UK Export Finance backed GBP2 billion loan due 2025 early, following its EUR1.6 billion disposal in September of ITP Aero in Spain. ITP Aero was founded by Rolls-Royce and Spain's Sener Aeroespacial SA in order to develop the EJ200 engine for the Eurofighter Typhoon fighter jet.
Rolls-Royce has GBP4 billion of drawn debt outstanding.
Chief Executive Officer Warren East said: "Our more agile operations and sustainably lower cost base position us well for the uncertain pace of the recovery from the pandemic, market volatility and changes in economic conditions."
Rolls-Royce will announce its 2022 results on February 23.
The stock was down 4.4% to 79.45 pence each in London on Thursday morning.
By Tom Budszus; tombudszus@alliancenews.com
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