As inflation and supply chain disruptions continue to rise, Rolls-Royce has cut its cash outflows by more than £1bn so far this year, but warns the outside market environment will remain difficult.
Free cash flow, one of the most important measures, increased by £1.1 billion to £68 million from the previous period, mainly due to increased flight hours from its aero engines, which they power the world’s largest wide-body aircraft.
Rolls-Royce maintained its previous guidance that it would generate “modestly positive free cash flow” by the end of 2022, according to Rolls-Royce’s 2017 results.
The company’s underlying operating profit at the end of June was $125 million, down from $307 million a year earlier. A resurgence in the power systems sector and a rebound in civil aerospace contributed to a 4% rise in underlying revenue to £5.31bn.
However, in the first half underlying profit margins were lower. This is something Rolls-Royce hopes to improve upon in the second half of the year.
Travel restrictions have been imposed in some places, slowing the recovery of the FTSE 100 group, which makes and services the engines for Boeing’s and Airbus’ huge wide-body jets.
As travel restrictions around the world ease in 2024, the company expects engine flight hours to return to pre-pandemic levels.
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