Rolls-Royce set to power forward after record year

Rolls-Royce has reported a record year, driven by measures implemented to transform the business.

In its recently published full-year results, the engineering giant, which has its Civil Aerospace and Defence businesses in Derby, reported a jump in underlying operating profit, which grew from £652 million in 2022 to almost £1.6 billion last year.

Meanwhile, revenues grew from almost £12.7 billion to £15.4 billion.

The company also posted record free cash flow of almost £1.3 billion.

Tufan Erginbilgic, chief executive at Rolls-Royce, said: “Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives.

“This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures.”

The performance of the Civil Aerospace and Defence divisions has been key to driving Rolls-Royce forward.

The company produces engines for passenger aircraft at its Civil Aerospace site at Sinfin.

Rolls-Royce said that large engine flying hours in Civil Aerospace recovered to 88% of 2019 levels, up from 65% in 2022.

And engine orders were the highest in more than 15 years, with major deals placed from Air India and Turkish Airlines.

In Defence, the AUKUS submarine agreement was announced, which will be supported by the expansion of the firm’s submarines site in Raynesway.

The deal sees Rolls-Royce provide the power for a new fleet of nuclear submarines for the UK and Australia.

Contracts worth a total of £4 billion, which will see Rolls-Royce supply nuclear reactors for the submarines, known as SSN-AUKUS, were signed last year.

To accommodate the work, Rolls-Royce is looking to double the size of its Raynesway site and create 1,200 new jobs.

Mr Erginbilic said: “We are managing the business differently and our significant performance improvement in the year reflects the hard work and focused actions of all our teams.

“We are also continuing to invest to drive future sustainable growth. Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our mid-term targets.

“We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce.”