Rolls-Royce Holdings Boosts Guidance After 1st Half Beat -- Earnings Review

   By Adria Calatayud 
 

British aircraft engine maker Rolls-Royce Holdings PLC (RR.LN) reported first-half results on Thursday. Here's what you need to know:

UNDERLYING PROFIT: Rolls-Royce swung to an underlying pretax profit of 73 million pounds ($95.8 million) compared with a loss of GBP143 million in the year-earlier period after an adjustment to reflect new accounting standards. This compares with forecasts of an underlying pretax loss of GBP3 million, according to a consensus based on three analysts' estimates provided by FactSet. The company also reported a swing to a pretax loss of GBP1.26 billion compared with a profit of GBP1.44 billion a year before, reflecting accounting adjustments on currency hedges.

REVENUE: The company increased first-half revenue to GBP7.49 billion, from GBP6.66 billion in the first half of 2017. This exceeded analyst forecasts of GBP6.59 billion, according to a FactSet-provided consensus based on a roundup of six analysts.

WHAT WE WATCHED

GUIDANCE: Rolls-Royce boosted its outlook for the year saying that both cash flow and underlying operating profit would be at the higher end of its guidance range. Chief Financial Officer Stephen Daintith said that would put profit at between GBP400 million and GBP500 million and cash flow at GBP450 million to GBP550 million.

Investors cheered the company's upbeat outlook and shares at 1247 GMT were up 5.6% to 1,043 pence.

TRENT 1000: Problems with Rolls-Royce's Trent 1000 engines, which power Boeing Co. (BA) 787 Dreamliners and Airbus SE (AIR.FR) A380 superjumbos, dragged on the first-half performance and will continue to do so over the next two years, the company warned.

Rolls-Royce booked a GBP554 million charge related to those issues in the first half. Cash costs to fix the engines will reach GBP450 million both this year and in 2019 and will amount to around GBP350 million in 2020, Rolls-Royce said.

RESTRUCTURING: The company said it has achieved positive early progress on its latest restructuring plan. The company plans to cut 4,600 jobs over two years with the aim of reaching annual savings of GBP400 million by the end of the program.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

August 02, 2018 09:18 ET (13:18 GMT)

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