* FY underlying pretax loss of 4 bln stg
* Cash outflow of 4.2 bln stg in 2020, in line with
consensus
* Sticks to 2021 cash burn guidance
* Says ITP sale progressing well
(Adds analyst comment, shares)
By Sarah Young
LONDON, March 11 (Reuters) - British engine-maker
Rolls-Royce plunged to a worse than expected 4 billion pound
($5.6 billion) loss in 2020 as the pandemic stopped airlines
flying, but stuck to its forecast to burn through less cash this
year.
Rolls' model of charging airlines for the number of hours
its engines fly meant much of its income dried up last year when
travel stopped. In 2020, it secured a total of 7.3 billion
pounds in debt and equity to help it survive.
Last year's cash burn of 4.2 billion pounds was in line with
analysts' expectations, and Rolls guided that would reduce this
year to 2 billion pounds, turning positive in the second half
when travel is expected to pick up. Rolls' civil aerospace arm
accounts for just over half of group revenue in a normal year.
On an underlying pretax basis, Rolls posted a loss of 4
billion pounds, worse than the 3.1 billion pound loss forecast
by analysts.
Despite that, the company said on Thursday its liquidity
position was strong and it could cope with even in a severe
downside scenario.
Its shares opened up 2.6% at 116 pence.
After taking on 5.3 billion pounds of debt last year, Rolls
is planning to repair its balance sheet by selling assets worth
2 billion pounds, the major part of which will be Spain-based
ITP, which is currently on the block.
"Our planned sale of ITP Aero is progressing well with
ongoing conversations with a number of potential buyers," Rolls
said.
But its asset sale plan ran into problems this week when
Norway suspended the 150 million euro sale of Rolls' Norwegian
unit, Bergen Engines, on security grounds.
Jefferies analyst Sandy Morris said Rolls had "much to do",
but it was feasible. "The possibility of reaching modest net
debt by end 2023 is alive," he said.
Rolls' cash flow improvement depends on airlines flying 55%
of 2019 levels during 2021. The company said its assumption is
for travel to gradually improve this year, accelerating in the
second half as vaccine programmes progress.
Blaming tightening travel restrictions in the early part of
this year, the company warned in January its 2021 cash burn
would be worse than previously expected.
($1 = 0.7175 pounds)
(Reporting by Sarah Young. Editing by Guy Faulconbridge and
Mark Potter)
Rolls-Royce (RR.)
