Rolls-Royce Holdings plc · LSE:RR.
Rolls-Royce — H1 2021 Earnings Presentation
22 slides from Rolls-Royce's earnings presentation, Aug 5, 2021
Slide 1: 2021 Half Year Results
2021 Half Year Results 5 August 2021 1 2021 Half Year Results © Rolls-Royce
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: Warren East, Chief Executive Officer
EP 3 2021 Half Year Results Warren East Chief Executive Officer © Rolls-Royce
Slide 4: H1 2021 highlights
H1 2021 highlights We are delivering on our commitments and investing in new business opportunities for future Restructuring Defence demand Net zero growth, particularly in net progressing well for tech-led solutions pathway announced zero power where we are leading the way with innovation and engin
Slide 5: Progress on restructuring - driving efficiency
Progress on restructuring - driving efficiency Our financial performance was severely impacted by the COVID-19 pandemic Restructuring progressing well • Headcount reduction – close to 90% complete – ~8,000 roles now removed, Civil Aerospace reduced by about 30% – Confident in target reduction of at
Slide 6: Strong liquidity and improving financial performance
Financial Strong liquidity and improving financial performance Our financial performance was severely impacted by the COVID-19 pandemic performance Underlying Revenue (continuing business) 2021 H1 Results summary 3% • Solid start to the year with improving cash flow and profits, as expected 23% 41%
Slide 7: Panos Kakoullis, Chief Financial Officer
7 2021 Half Year Results Panos Kakoullis Chief Financial Officer © Rolls-Royce
Slide 8: 2021 Half Year underlying results
Underlying Organic More balanced across the business units. 2021 Half Year £m 2021 H1 2020 H1 Change1 Large negative LTSA catch up in the underlying results Revenue 5,227 5,410 (86) prior year from continuing businesses Cost reductions, mostly in Civil Gross profit/(loss) 1,097 (965) 2,082 Aerospace
Slide 9: Civil Aerospace
Civil Aerospace Underlying results Organic £m 2021 H1 2020 H1 Change % Revenue 2,168 2,516 (336) (13)% Gross profit/(loss) 380 (1,552) 1,940 n/a Restructured business with smaller Large engine KPIs Gross margin % 17.5% (61.7)% 79.4%pt footprint and leaner workforce 100 OE deliveries Operating profit
Slide 10: Defence
Defence Underlying results Organic £m 2021 H1 2020 H1 Change % Timing and mix of sales benefitted first half, full Revenue 1,721 1,553 266 17% year expectation unchanged Gross profit 395 332 80 24% Order intake Gross margin % 23.0% 21.4% 1.3%pt £1.2bn up 5% Operating profit 269 210 72 35% 0.7 book t
Slide 11: Power Systems
Power Systems Underlying results Organic £m 2021 H1 2020 H1 Change % Growth in aftermarket Revenue 1,181 1,214 (49) (4)% offset by lower OE Gross profit 301 263 34 13% Order intake Gross margin % 25.5% 21.7% 3.8%pt £1.4bn up 19% Operating profit 41 33 9 26% 1.2 book to bill Operating margin % 3.5% 2
Slide 12: £1.7bn improvement in free cash outflow
Non-repeat of c.£1.2bn HY 2020 non- cash charges increases EBITDA, offset in LTSA / provisions Working capital EBITDA +£1,203m £(215)m £1.7bn Growth +£1,941m FX hedges £(90)m £(188)m £(1,174)m improvement in Interest & facility Pensions £(1)m free cash outflow PPE & fees Tax & other 2021 H1 £(896)m
Slide 13: Rebuilding the balance sheet
Rebuilding the Net debt progression (pre-leases) Illustrative, not to scale balance sheet >£2bn Net cash medium-term £(3.1)bn Improving free cashflow Organic cash 2021 H1 ~£(0.8)bn £2bn generation Disposals progressing well Net Debt ~£(4)bn 2022+ 2021 H2 FCF ~£(0.2)bn 2021 H2 Exceptional 2021 Dispos
Slide 14: Focused disposal programme to sell non-strategic assets
Focused disposal programme to sell non-strategic assets Disposals programme progressing well Other towards target assets UK Civil nuclear Bergen Engines instrumentation and controls Announced Announced 4 August 2021 7 December 2020 • Focused disposal programme to sell non-strategic assets • Target t
Slide 15: 2021 outlook and guidance
Good start to 2021, on track to deliver on our commitments • 2021 FCF expected to turn positive during the second half 2021 and targeting 2021 outlook around £(2)bn for the full year and guidance • Our self-help actions are generating savings and efficiency gains: on track to deliver at least £1bn i
Slide 16: Deliver, Simplify, Invest
Clear financial priorities to Deliver measure our on our commitments performance Simplify how we report Invest wisely for the future 16 2021 Half Year Results © Rolls-Royce
Slide 17: Looking to the Future
Looking to the Future Warren East Chief Executive Officer 17 2021 Half Year Results © Rolls-Royce
Slide 18: Fundamental role to play in meeting climate change challenge
We have a Applying technical pathways to Net Zero Targets fundamental role decarbonise complex, critical systems to play in meeting Rolls-Royce Products in Service Change in Annual CO2 Emissions from 2019 to 2050 the challenge of climate change 2019 2025 2030 2035 2040 2045 2050 Time Hypothetical ‘n
Slide 19: Looking to the future
Civil Aerospace Defence Power Systems Looking to the future • Lower investment needed as engine programmes • Long-lifespan products supported by through-life • Loyal customer base with regular replacement cycle mature upgrades and aftermarket services • Growing in China with a • Focus on efficiency
Slide 20: New business opportunities: Rolls-Royce Electrical
New business opportunities Laying the foundations for growth beyond our current portfolio Rolls-Royce Electrical Increased disclosure to be introduced in FY21 results Progress on development of electrical propulsion systems for smaller aircraft for SMRs and Electricals • Commercial contract with Ver
Slide 21: New business opportunities: Small Modular Reactors
New business opportunities Investing in new growth opportunities linked to the decarbonisation of Rolls-Royce Small Modular Reactors: electricity, hydrogen Affordable, scalable, low carbon power solutions production and transport Assembled consortium of Completion of UK parties, alongside HMG, to re
Slide 22: Summary
Summary Delivering on financial priorities and looking towards a lower carbon future Restructuring on track and delivering expected results Disposal programme progressing well towards £2bn target Improving cash flow and profitability and on track for 2021 guidance Strong liquidity and targeting net