UK Stocks: Rolls-Royce Results Impress, Shares Spike to All-Time High
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UK Stocks: Rolls-Royce Results Impress, Shares Spike to All-Time High

Story Highlights

British engine designer and manufacturer Rolls-Royce impressed investors with solid financial performance for Fiscal 2023, lifting shares to an all-time high.

In news on major U.K. stocks, British engine maker Rolls-Royce Holdings (GB:RR) impressed shareholders with solid results for the full year Fiscal 2023. The company made £1.6 billion in underlying operating profit in FY23, almost double that of FY22. Also, revenues jumped 22% to £16.5 billion. The aerospace company’s results were favourably impacted by cost-saving measures and a solid recovery in demand for its products. RR shares jumped over 11% on the news today to hit a fresh all-time high of 367.96p.

Rolls-Royce is one of the world’s largest engine manufacturers. The FTSE 100-listed company operates through three divisions: civil aerospace, defence, and power systems.

Further Details About RR’s Performance

Talking about its cost-saving plan, Rolls-Royce said that it has already achieved £150 million so far and is on track to meet its savings target of between £400 and £500 million. The company is also steadily slashing jobs, targetting between 2,000 to 2,500 layoffs. These efforts have shored up its free cash flow to reach £1.3 billion in 2023, up from £505 million in the prior year. Despite the solid financial performance, CEO Tufan Erginbilgic withheld from announcing any dividend payouts for the fiscal year. RR halted its dividend payments during the pandemic when its performance was heavily impacted by a slowdown in air travel.

Interestingly, one of its key performance measures, its engine flying hours, recovered to 88% of pre-pandemic levels, growing 36% year-over-year. Moreover, the demand for large engines was the highest since 2007. The company even hopes to divest some of its power systems business, which should generate up to £1.5 billion in gross proceeds by 2028.

Coming to the outlook for 2024, Rolls-Royce forecasts underlying operating profit between £1.7 and £2.0 billion and free cash flow of £1.7 to £1.9 billion. Meanwhile, the company warned of supply chain constraints to continue over the next two years alongside geopolitical and macro headwinds.

Is Rolls-Royce a Buy or Sell?

With 11 Buys, one Hold, and one Sell rating, RR stock commands a Strong Buy consensus rating on TipRanks. The Rolls-Royce Holdings share price target of 379.32p implies 6.1% upside potential from current levels.



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