Shares in Rolls-Royce topped the FTSE 100 today, after the world-famous engine maker’s annual profit more than doubled.
The rebound was powered by the return of jets to the skies and a strategy overhaul from its tough-talking chief executive, Tufan Erginbilgic.
He said the turnaround plan was behind the “record performance” as “we focused on commercial optimization and cost efficiencies across the group”.
Shortly after he was appointed, Erginbilgic compared Rolls-Royce to “a burning platform”. Today, he said there was “no silver bullet”, even as he hailed the success of efforts to “significantly improve management information and performance management” and pointed to more action.
“We have a lot more to do here”, the former BP executive said in a conference call with investors, but voiced “confidence on our mid-term targets”.
But he warned that supply chains were expected “to remain challenging for another 18 to 24 months”.
The Derby-based giant reported 2023 underlying profit of £1.6 billion, up from £652 million a year earlier. That flew past its own forecasts of a range between £1.2 billion and £1.4 billion, and City predictions of £1.4 billion.
The rebound was also helped by the recovery in aviation after the pandemic. Rolls-Royce is paid for the amount of time its Trent-branded engines are in the air, and Erginbilgic said flying hours are back at 88% of pre-Covid levels.
Rolls-Royce engines also drive submarines and ships and it makes power generation systems. Its defence division reported order intake of £5.2 billion, with “double digit growth in combat and submarines”.
For 2024, the £27-billion company pledged a further 6% rise in group-wide underlying operating profit of between £1.7 billion and £2 billion.
Natalya Davies at investment research firm Edison called the 2023 results “exceptional” saying they “catapulted the company from adversity … the market will await further guidance throughout the year to ensure the company's sustained success.”
Shares were up 31p to 360p, a rise of over 9%.
