The boss of Rolls-Royce has said he is confident the company has a “sustainable future” and will emerge from the pandemic a “more resilient” business.
Warren East, who is stepping down from the aerospace firm later this year, is set to address shareholders at the company’s annual general meeting on Thursday (May 12).
“As a result of the actions we have taken, we have made significant progress on the path to recovery from the impact of Covid-19 and are emerging as a better balanced and more resilient business,” Mr East said.
The aerospace firm, which has UK bases in Derby and Filton, near Bristol, said it expected “positive momentum” in its financial performance in 2022, despite macroeconomic uncertainties.
In February, The company swing back into the black with profits of £124m – up from a £3.1bn loss a year earlier.
Rolls-Royce has cut nearly 9,000 jobs from its global workforce since the pandemic hit. It has also already announced plans to sell off four of its ancillary businesses – two of which were sold in 2021. The sales are expected to generate around £2bn for the company.
In its latest trading update, announced on Thursday, Rolls-Royce confirmed it was working closely with its supply chain to limit the impact of disruption caused by global uncertainties such as the war in Ukraine. Around 20% of the company’s titanium supplies come from Russia, but the engineering firm has been stockpiling for months in preparation.
In its civil aerospace business, Rolls-Royce said engine flying hours for the first four months of 2022 were 42% higher than the year before. The company said passenger demand for flying was recovering on routes where travel restrictions have been lifted, such as in Europe and the Americas, but additional Covid-19 restrictions had resulted in fewer flights in China where the situation was still evolving. The engineering firm said it was “continuing to capitalize” on new opportunities in 2022.
Earlier this month, Australian airline Qantas confirmed it was investing in a dozen Rolls-Royce-powered Airbus A350-1000s for the launch of its first non-stop flights between London to Sydney and Melbourne.
The airline has ordered 12 of the new plans – powered by Trent XWB-97 engines made in Derby – which are capable of flying half way around the world without needing to land.
In defence, Rolls Royce said its operating margin was expected to be lower this year compared with 2021 but this was due, in part, because of planned increases in investment to support new program wins. The aerospace giant also said order intake had been “very strong” across its power systems business, particularly in power generation and the defence-end market, and interest in sustainable solutions was “increasing”.
Rolls-Royce’s first engines for power generation, construction and industrial applications have been approved for operation with sustainable fuels and the company is developing hydrogen engines. It also said it was “encouraged” by the recent commitment to nuclear energy by the Government.
Rolls-Royce has also completed flight-testing of a hybrid-electric demonstrator aircraft powered by a parallel-hybrid propulsion system. The business is investing heavily in new and existing technologies in its drive towards net zero. The shift towards green technologies is the biggest since the arrival of the jet engine, according to the firm.
Mr East added: “We are confident that we have positioned the business to achieve positive profit and cash this year, driven by the benefits of our cost reductions.”
Rolls-Royce’s next scheduled trading update is on August 4, 2022, when the company will publish its half year results.
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