Aircraft engine maker Rolls-Royce sees earnings take-off as turnaround programme gathers pace

The results come a week after Rolls hiked its earnings outlook for the full-year to between £1.2bn and £1.4bn this year, up from the previously guided range of £800m to £1bn.

The profit cheer sent its shares surging higher on the day, to levels not seen since the start of the Covid-19 pandemic.

It has been benefiting from an overhaul, which saw it cut thousands of jobs following the heavy impact of the pandemic and actions to slash costs and create efficiencies in a bid to improve profits.

Rolls has also seen its key civil aerospace division boosted by a recovery in long-haul travel following the pandemic, which is driving demand from airlines for engine maintenance.

Chief executive Tufan Erginbilgic kicked off another transformation programme at the start of the year, shaking up senior management among other changes.

He said the plan had “started well with progress already evident in our strong initial results and increased full year guidance for 2023”.

But he said there is “more to do” under the programme and it has also been undertaking a strategic review with aims to reveal the findings later this year.

He said: “There is much more to do to deliver better performance and to transform Rolls-Royce into a high performing, competitive, resilient, and growing business.

“We will share the outcome of our strategy review along with medium-term goals for the group in November.”

The company has seen a marked improvement in flying hours by engines from its civil aerospace operation, up 36 per cent in the first half and reaching 83 per cent of 2019 levels.

It also banked 240 large engine orders in the half-year, up from 96 the previous year.

Its civil aerospace division delivered operating profits of £405m compared with a loss of £79m a year ago. The group’s power systems division saw lower profit margins in the first, but Rolls said it expects this to improve in the second half due to pricing actions and cost savings. Operating profits grew by a third to £261m in its defence business – which the group said was its most “resilient” division – with the sector benefiting from increased global demand as a result of the war in Ukraine.