Rolls-Royce ‘confident’ about future as recovery continues

The boss of Rolls-Royce has said the engineering giant is ‘confident’ about the future after experiencing continued recovery and raising £2 billion from disposals.

In a recent trading update, the firm, which has its Civil Aerospace and Defence divisions in Derby, said it had seen large engine flying hours continue to recover.

The firm also said that two five-year contracts had been renewed with its Defence business, securing $1.8 billion of continued aftermarket services.

Chief executive Warren East said: “The continued recovery in large engine flying hours, record order intake in power systems and a resilience in the defence business give us confidence in the future.

“Our more agile operations and sustainably lower cost base position us well for the uncertain pace of the recovery from the pandemic, market volatility and changes in economic conditions.”

Rolls-Royce designs, develops and manufactures aero engines for passenger aircraft at its Sinfin base.

According to the trading update, large engine flying hours were at 65% of pre-pandemic levels in the four months to the end of October and up 36% in the year-to-date.

Currently, the firm is focused on creating more environmentally friendly and efficient aero engines, which run on Sustainable Aviation Fuels. Much of this work is being carried out at its Derby site.

Mr East said: “Our expertise and strong positions in established markets and investment in new markets place us well to pursue decarbonisation, Net Zero and evolutionary technologies that can create substantial long-term economic and social value.

“Disciplined capital allocation will continue to be pivotal in our new markets ventures as we invest in the technologies of the future.”

In September, Rolls-Royce completed its £2 billion programme of disposals with the sale of ITP Aero for €1.6 billion, and immediately repaid its £2 billion UK Export Finance-backed loan, which had been due in 2025.

Mr East said: “The completion of our disposal programme with the sale of ITP Aero has enabled us to repay £2 billion of debt.

“This marks a milestone recovery in the strength of our balance sheet, and a clear step on our path back to investment grade in the medium-term.”