Rolls-royce Holdings Plc · LSE:RR.
Rolls-royce — Investor Day (November 2023)
19 slides from Rolls-royce's investor day presentation, November 2023
Slide 1: Rolls-Royce 2023 Capital Markets Day
ROLLS-ROYCE 2023 CAPITAL MARKETS DAY
Slide 2: Safe Harbour Statement
SAFE HARBOUR STATEMENT This announcement contains certain forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. In particular, all statements that express forecasts, expectations and projections with re
Slide 3: Tufan Erginbilgic, Chief Executive Officer
TUFAN ERGINBILGIC Chief Executive Officer
Slide 4: Meet the Team
MEET THE TEAM Deep experience and fresh perspectives Tufan Erginbilgic Chief Executive Officer Helen McCabe Dr. Rob Watson Adam Riddle Dr. Jörg Stratmann Chief Financial President, President, President, Officer Civil Aerospace Defence Power Systems Chris Cholerton Nikki Grady-Smith Simon Burr Sarah
Slide 5: Agenda
AGENDA TOPIC TIMINGS SPEAKER Strategic update and mid-term targets Tufan Erginbilgic Financial summary and capital framework Helen McCabe Q&A Tufan Erginbilgic and Helen McCabe Refreshments and exhibition 14:20 – 15:10 Civil Aerospace Dr. Rob Watson Power Systems Dr. Jörg Stratmann Defence Adam Ridd
Slide 6: Rolls-Royce Proposition
ROLLS-ROYCE PROPOSITION 1. HIGH PERFORMING, COMPETITIVE AND RESILIENT BUSINESS 2. GROWING SUSTAINABLE CASH FLOWS 3. STRONG BALANCE SHEET AND GROWING SHAREHOLDER RETURNS © 2023 Rolls-Royce Not Subject to Export Control 6
Slide 7: Differentiated Group Strengthened Through Transformation
DIFFERENTIATED GROUP STRENGTHENED THROUGH TRANSFORMATION …TRANSFORMING INTO… BUILDING ON…. § A more resilient and efficient business with § Civil Aerospace | Leading positions in Business Aviation, and ‒ Quality of earnings – cash expansion focused exclusivity on the latest Airbus widebody aircraft
Slide 8: Differentiated and Advantaged Technologies
DIFFERENTIATED AND ADVANTAGED TECHNOLOGIES Advantaged technologies UltraFan Nuclear Systems integration Leading technologies for next generation Trusted and proven aircraft reactor design Advanced manufacturing Vertically integrated Control systems Next generation technology Electrical systems © 202
Slide 9: Capturing Performance Improvement Opportunities
CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Strategic framework 1. Portfolio choices & partnerships High performing Operating profit 2. Advantaged businesses & strategic initiatives Competitive Operating margin Growing 3. Efficiency & simplification Sustainable cash flow Resilient 4. Lower carbo
Slide 10: Group Mid-term Targets
CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Group mid-term targets Operating profit Operating margin Free cash flow Return on capital £2.5bn-£2.8bn 13-15% £2.8bn-£3.1bn 16-18% +£1.8bn-£2.1bn +8-10pts +£2.3bn-£2.6bn +11–13pts 5.1% 4.9% £0.65bn £0.5bn 2022 2023 Mid-term 2022 2023 Mid-term 2022 202
Slide 11: Divisional Mid-term Targets
CAPTURING PERFORMANCE IMPROVEMENT OPPORTUNITIES Divisional mid-term targets Divisional operating margin, % CIVIL AEROSPACE DEFENCE POWER SYSTEMS +12-14 pts +2-4pts +4-6pts 11.8% 8.4% 2.5% 15-17% 14-16% 12-14% 2022 2023 Mid-term 2022 2023 Mid-term 2022 2023 Mid-term © 2023 Rolls-Royce Not Subject to
Slide 12: 1. Portfolio Choices & Partnerships
1. PORTFOLIO CHOICES & PARTNERSHIPS Focused and granular approach Key investment areas for performance and growth Partnerships Exits Focused on CIVIL AEROSPACE § Non-core businesses § Valued higher outside portfolio Business Aviation Widebody Narrowbody DEFENCE Electrical – Advanced Air Mobility Tra
Slide 13: 2. Advantaged Businesses & Strategic Initiatives: Attractive and Growing Markets
2. ADVANTAGED BUSINESSES & STRATEGIC INITIATIVES Positioned in attractive and growing markets 2022-2030 annual market growth rates1 COMMERCIAL AVIATION DEFENCE POWER SYSTEMS 3-5% Business Aviation 0-2% Combat & Transport 5-7% Power Generation 5-7% UK & AUKUS 4-6% Widebody Submarines Mobile Applicati
Slide 14: Sustainably Expanding Earnings Potential
2. ADVANTAGED BUSINESSES & STRATEGIC INITIATIVES Sustainably expanding earnings potential Group operating profit improvement Strategic initiatives driving margin improvements CIVIL AEROSPACE 15-17% Mid-term operating margin target £2.5bn-£2.8bn 2022 Business Efficiency & Portfolio Aviation Widebody
Slide 15: 3. Efficiency & Simplification
3. EFFICIENCY & SIMPLIFICATION Sustainable cost efficiency to improve competitiveness and resilience Key drivers Total Cash Cost / Gross Margin (TCC/GM) (40-50)% Right-sizing the organisation 0.8x § Reduction of 2,000-2,500 roles proposed worldwide § Focus on efficiency, simplification and enterpris
Slide 16: 4. Lower Carbon & Digitally Enabled Businesses
4. LOWER CARBON & DIGITALLY ENABLED BUSINESSES Transition to lower carbon, supporting our customers on their journey to net zero AEROSPACE ENGINE EFFICIENCY SUSTAINABLE AVIATION FUEL AND DEFENCE § Committed to 2050 net zero ambition POWER ALTERNATIVE FUELS AND HYBRID BATTERY ENERGY § All in-producti
Slide 17: Differentiated Customer Experience and Greater Operational Efficiency
4. LOWER CARBON & DIGITALLY ENABLED BUSINESSES Differentiated customer experience and greater operational efficiency CUSTOMER DESIGN MANUFACTURE PEOPLE Differentiated service and Digitally-integrated Improved operational Digitally connected experience design, build and operate performance workforce
Slide 18: Long-Term Growth Momentum
LONG-TERM GROWTH MOMENTUM Continued material growth opportunities beyond mid-term Rolls-Royce long-term growth prospects New business Additional upside potential from narrowbody and nuclear micro-reactors SMR Poised to play major role in the civil nuclear market Power Systems Grow in line with marke
Slide 19: Key Messages
KEY MESSAGES Portfolio choices & Efficiency & simplification partnerships Advantaged businesses Lower carbon & digitally & strategic initiatives enabled businesses £2.5bn-£2.8bn £2.8bn-£3.1bn Operating profit Free Cash Flow 13-15% 16-18% Operating margin Return on capital © 2023 Rolls-Royce Not Subj