(Alliance News) - Rolls-Royce Holdings PLC on Friday said that it had a "good" end to 2019 after a "challenging" first half, with a narrowed pretax loss and revenue rise.
Shares in London were trading 4.0% higher at 624.80 pence each in morning trade.
The jet engine maker recorded a pretax loss of GBP891 million for 2019, compared with GBP2.95 billion pretax loss a year ago, on a revenue of GBP16.59 billion and GBP15.73 billion, respectively. The narrowed loss was mainly due to sharply lower net financing costs, which fell 92% year-on-year to GBP178 million.
On an adjusted basis, annual pretax profit totalled GBP583 million for 2019, up 26% from GBP466 million a year ago and from GBP465 million consensus estimates.
Annual underlying operating profit - the company's preferred profit measure - jumped 32% year-on-year to GBP808 million. Consensus estimates saw underlying operating profit at GBP657 million. The growth in underlying operating profit was attributed to organic profit improvement in Civil Aerospace division and profit growth in Power Systems unit.
Rolls-Royce retained its guidance for fixing Trent 1000 engines and said that it remained on track to reduce aircraft on ground to single digits by the end of the second quarter of 2020.
In the first half of 2019, Rolls-Royce experienced problems with the Trent 1000 TEN jet engine, and fixing those took longer than expected. The aerospace firm had been forced to launch a major maintenance and repair programme after discovering the high-pressure turbine blades on the engine deteriorated faster than anticipated.
Looking ahead, London-based Rolls-Royce said it expects to report core underlying operating profit growth of about 15% in 2020 and stable to low single-digit growth in core revenue.
Core underlying operating profit, which excludes some non-core operations, in 2019 totalled GBP810 million versus GBP631 million a year ago. Core revenue increased 7% to GBP15.26 billion.
Commenting on the outlook for 2020, Chief Executive Warren East said: "The momentum we gained in 2019 underpins our confidence for the year ahead. We will continue to make progress against our key drivers of improving OE losses, growing after-market cash flow, and controlling our indirect costs, while investing significantly in R&D to enable our future growth.
"There are macro risks to navigate in 2020, notably the outbreak of COVID-19. The situation is still evolving, and as such our guidance for 2020 excludes any material impact. We are monitoring developments, taking mitigating actions, and will update the market as appropriate."
Rolls-Royce declared a 11.7p dividend for 2019, unchanged year-on-year. Consensus saw 2019 dividend at 12.2p.
Separately, the company said it it has appointed senior BP PLC executive Angela Strank as non-executive director, effective May 1. Strank currently serves as chief scientist and head of Downstream Technology unit at oil giant BP.
By Tapan Panchal; tapanpanchal@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
BP (BP.)
Rolls-Royce (RR.)
