(Alliance News) - Rolls-Royce Holdings PLC is making good progress on its operational problems, it said Tuesday, as it reported solid interim revenue growth.
Revenue for the six months to June climbed 5% to GBP7.88 billion, with the pretax loss shrinking to GBP791 million from GBP1.23 billion year-on-year. Organic revenue growth was 7%.
Rolls-Royce's core underlying operating profit rose 22% to GBP203 million, and at a group level, was up 32%.
The company has reiterated 2019 core underlying operating profit and free cash flow guidance of GBP700 million, plus or minus GBP100 million. In 2018, Rolls-Royce recorded core underlying operating profit of GBP616 million and free cash flow of GBP641 million.
Rolls-Royce has had a number of operating problems recently, including faster-than-expected deterioration of its Trent 1000 TEN engine blades. Customer disruption "regretfully" is still ongoing, Rolls-Royce said Tuesday, though progress is being made.
The firm now expects the 2019 impact of the Trent 1000 issues to be GBP450 million to GBP500 million, from GBP450 million previously.
Chief Executive Warren East said: "We delivered further progress across the group in the first half in line with our full year expectations. We expect a significant improvement in cash in the second half as we unwind inventory built up to support customer deliveries and benefit from improved trading in both Power Systems and Civil Aerospace.
"In Civil Aerospace we delivered on key drivers of future cash flow with further improvement in average OE unit losses and continued aftermarket growth. Defence grew both revenue and profit and enjoyed substantial order intake. In Power Systems we also saw good revenue growth and order intake and entered the second half underpinned by a healthy backlog."
"We have made good progress on resolving the Trent 1000 compressor issue, though regretfully, customer disruption remains. Progress on our restructuring programme is in line with the plan we outlined a year ago," he added.
Rolls-Royce delivered 257 large engines in the half, and is on track for 500 large aircraft engines in the full year. Civil Aerospace underlying revenue was up 12% to GBP4.02 billion, with the operating loss narrowing 91% to GB21 million.
Power Systems revenue climbed 6% on an underlying basis to GBP1.55 billion, with underlying operating profit up 20% to GBP96 million, driven by the revenue growth and a "favourable mix".
In Defence, underlying revenue was up 6% to GBP1.49 billion and the operating profit figure on an underlying basis up 7% to GBP173 million. In ITP Aero, the figures rose 22% to GBP457 million and fell 20% to GBP32 million respectively.
Rolls-Royce (RR.)
