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(Alliance News) - Rolls-Royce Holdings PLC shares surged on Thursday as the company delivered a debt reduction and revenue increase in its 2022 results.
Rolls-Royce shares were up 15% trading at 124.22 pence per share on Thursday morning in London.
The London-based aerospace power systems supplier reported statutory pretax loss of GBP1.50 billion, widening from GBP294 million a year ago.
The company explained its statutory pretax loss was the result of a GBP1.58 billion fair value loss on derivative contracts and GBP308 million in net interest payable, despite a GBP81 million profit from disposals from continuing operations.
Underlying pretax profit was GBP206 million, multiplying from GBP36 million a year ago.
Rolls-Royce said it is focused on delivering a "signifiant performance improvement" in 2023, as its restructuring programme continues. It added that a strategic review is underway to identify its investment priorities, and medium term financial targets will be set out in the second half of 2023.
Rolls-Royce posted 2022 statutory revenue of GBP12.52 billion, up 20% from GBP11.22 billion in 2021. The company said underlying revenue was GBP12.69 billion, up 16% from GBP10.95 billion a year ago, and ahead of the average market consensus of GBP11.59 billion.
The revenue increase was driven by increases across its aerospace, defence and power systems sectors, Rolls-Royce said.
The company said net debt was GBP3.25 billion, narrowing from GBP5.16 billion, ahead of Shore Capital's forecast of a reduction to GBP4.64 billion.
Rolls-Royce did not declare a dividend for 2022, unchanged from a year ago, noting: "we are committed to returning to an investment grade credit rating through performance improvement, and to resuming shareholder payments".
Chief Executive Officer Tufan Erginbilgic said: "While our performance improved in 2022, we are capable of much more. Our transformation programme will improve our efficiency and commercial outcomes, and deliver a sustainable reduction in working capital. This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt. Our success will enable us to reward investors for their support and invest in future growth.
"Our transformation programme is already underway and is moving at pace. It will include a strategic review so that we can prioritise our investment towards the most profitable opportunities."
Rolls-Royce noted that large engine flying hours were at 65% of 2019 levels, having increased towards the end of 2022 as China reopened. The company said it expects large engine flying hours to be at between 80% and 90% of 2019 levels in 2023.
By Harvey Dorset, Alliance News reporter
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