Rolls-royce Holdings Plc · LSE:RR.
Rolls-royce — Investor Presentation (April 2022)
47 slides from Rolls-royce's investor presentation, April 2022
Slide 1: Rolls-Royce Investor Presentation April 2022
Rolls-Royce Investor Presentation April 2022 1 Investor Presentation © 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: Company overview
1 Company overview InvestorPresentation 3 Investor Presentation © © Rolls-Royce Rolls-Royce
Slide 4: Who we are: underlying revenue by business £10.9bn
Underlying revenue by business New Markets and other Who we are businesses 3% We are one of the world's leading industrial technology companies. Power Systems Our purpose is to pioneer 22% Civil the power that matters to Aerospace 41% connect, power and protect society. £10.9bn We deliver cleaner, m
Slide 5: What we do
CIVIL • Major manufacturer of aero engines for the 4% 3% large commercial aircraft, business aviation £4,536m Underlying revenue AEROSPACE and regional jet markets Underlying revenue Large engines 21% Business • Engineering expertise, in-depth knowledge £(172)m Regional What we do and capabilities t
Slide 6: Civil Aerospace: large engines and business aviation
Large engines (widebody) Civil Aero restructuring <10yr 55% Investment Average engine age of market order in new Civil Aerospace giving us one of the backlog supporting programmes youngest fleets market share growth largely complete For the past 25 years, our family of turbofan aircraft engines have
Slide 7: Defence: long term drivers of defence spending
Defence Demand for defence business’ transport, UK Mod 25% combat, submarine and naval products is driven US DoD 50% by government defence spending Export 25% ME, Korea, Japan, Canada and India Long term drivers of defence spending • US: large new programmes expected for US DoD (including FLRAA) • U
Slide 8: Power Systems medium and long term outlook
Power Systems Power Generation Marine Industrial Defence 33% of Sales 33% of Sales 25% of Sales 9% of Sales • Mission critical backup • Government focused • Oil & Gas, mining, • Defence end markets Diversified end markets and power for data centres, customer base with construction and driven by Gove
Slide 9: New Markets: Rolls-Royce SMR and Electrical
New Markets Rolls-Royce SMR Leveraging Our world needs more low-carbon synergies across power than ever. the group Factory production of modules lowers cost and risk with a design that offers certainty of cost and safety standards Rolls-Royce Electrical with repeatable precision engineering We devel
Slide 10: Fundamental role in meeting the challenge of climate change
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 11: Low carbon technologies: UltraFan and sustainable fuels
UltraFan: next generation aero engine • Scalable engine architecture offers market optionality Low carbon • 25% more fuel efficient and 100% sustainable aviation fuel compatible technologies • Incorporates ALECSys Lean Burn Combustor • Progressing to final assembly Improving engine efficiency and en
Slide 12: Enabling net zero: hydrogen, energy storage, SMRs
Hydrogen • Member of European Clean Hydrogen Alliance • Exploring the fundamentals of H2 in aviation • Partnership with Daimler Truck / Volvo on stationary H2-powered Enabling net zero fuel-cell generators in finalisation • MTU Series 500 engine for power generation to be available for operation wit
Slide 13: Enabling net zero: electric aviation
Urban Air Mobility • First commercial contract for electric propulsion units to power an eVTOL vehicle (with Vertical Aerospace) Enabling net zero: • Vertical Aerospace >$5bn pre-orders for >1,300 aircraft electric aviation • EVE >$5bn pre-orders for >1,700 aircraft • CityAirbus eVTOL demonstrator f
Slide 14: FY 2021 results
2 FY 2021 results InvestorPresentation 14 Investor Presentation © © Rolls-Royce Rolls-Royce
Slide 15: Operational highlights
New image to follow Operational highlights Civil Aerospace Key award in Defence Order intake accelerated restructuring with B-52 in Power Systems Successful SMR Two world records £2bn total disposal fundraising & next phase with Spirit of Innovation proceeds expected commencement 15 Investor Present
Slide 16: Financial summary
Improved financial performance Financial Delivering on our commitments Our financial performance was severely impacted by the COVID-19 pandemic summary Investing for growth and sustainable value Operating profit £bn 1 2021 • Improved financial performance driven by cost reduction and market growth 0
Slide 17: Successful restructuring programme
Successful restructuring programme Our financial performance was severely impacted by the COVID-19 pandemic Restructuring update ✓ Exceeded our £1.3bn run-rate savings target one year ahead of schedule Civil operations footprint 1/3 smaller ✓ Civil Aerospace one third smaller, creating a leaner, mor
Slide 18: 2021 Full Year underlying results
2021 Full Year Underlying2 Organic £m FY 2021 FY 2020 Change1 underlying results Lower Civil Aerospace revenue Revenue 10,947 11,430 (214) balanced by growth in Defence and Underlying performance Power Systems from continuing operations Gross profit / (loss) 1,996 (613) 2,672 Gross margin % 18.2% (5
Slide 19: Civil Aerospace
Civil Aerospace Underlying results Organic Reduction in engine £m FY 2021 FY 20201 Change % deliveries partly offset by improvement in Revenue 4,536 5,068 (491) (10)% LTSA catch up Gross profit / (loss) 474 (1,987) 2,477 Restructured business with smaller footprint Large engine KPIs Gross margin % 1
Slide 20: Defence
Defence Underlying results Organic £m FY 2021 FY 20201 Change % Higher services sales in Revenue 3,368 3,355 155 5% both the UK and US Gross profit 721 684 63 9% Profitable mix due to spare parts Order intake Gross margin % 21.4% 20.4% 0.9%pt £2.3bn up 3% Operating profit 457 461 13 3% 0.7 book to b
Slide 21: Power Systems
Power Systems Underlying results Organic £m FY 2021 FY 20201 Change % Revenue 2,749 2,735 89 3% Gross profit 778 678 120 18% Order intake Gross margin % 28.3% 24.8% 3.6%pt More profitable £3.3bn up 24% Operating profit 242 188 67 37% product mix through services sales and 1.2 book to bill improved f
Slide 22: New Markets
£490m SMR committed funds £68m R&D Spend New Markets 10% 23% Leveraging synergies Rolls-Royce 43% RR Electrical +41% across the group Equity Investment RR SMR +164% UKRI Government Grant 47% 77% Employees (FTE at year end) >570 up 60% • A ramp-up in R&D spend as we invest to develop our products and
Slide 23: Summary funds flow
£m FY 2021 FY 2020 Change Underlying operating 414 (2,008) +2,422 Summary funds (loss) / profit £2.0bn flow: Depreciation, amortisation 971 1,048 -77 Operating performance £(1.5)bn free cash and impairment 1 improvement Led by cost savings, higher outflow in 2021 Civil Aero net LTSA contract EFH rec
Slide 24: Rebuilding the balance sheet
Pathway to investment grade profile Rebuilding the Reduce Improve financials balance sheet uncertainty Improve Reduced Improve business Deliver Improve Clear pathway to on our uncertainty operational leverage profile Strong ESG improving our credit of EFH and financial (balanced scorecard commitment
Slide 25: Disciplined Investments
Disciplined Investments by the COVID-19 pandemic Investments Our updated approach to investment places an even greater focus on sustainability and ESG 25 Investor Presentation © Rolls-Royce
Slide 26: Deliver, Simplify, Invest
Clear financial priorities to drive and support our Deliver business on our commitments performance Simplify how we report Invest wisely for the future 26 Investor Presentation © Rolls-Royce
Slide 27: 2022 outlook and guidance
Well positioned for the anticipated growth in our end markets 2022 outlook • Positive momentum in 2022 despite the challenges and risks around the pace of market recovery, global supply chain disruption and rising inflation. and guidance • A strong order book and continuation of the gradual improvem
Slide 28: Civil Aerospace: driving growth from established businesses
Civil Aerospace © Dassault • Improved operational gearing with restructured cost base • Significant value in installed base of around 5,700 large and 9,700 regional and business aviation engines • Airbus A350 freighter is a great opportunity for Trent XWB with 58 additional engine orders since its l
Slide 29: Defence: driving growth from established businesses
Defence • Strategic investments in products and facilities supports strong order book and long-term sustainable growth • Awarded the B-52 engine replacement contract in the US, securing new work for the coming decades • In a competitive process for the Future Long-Range Assault Aircraft (FLRAA) prog
Slide 30: Power Systems: driving growth from established businesses
Power Systems • 2021 represented the best order book in Power Systems’ history, with a record order intake in the 4th quarter • Significant awards include power solution for hyperscale data centre customer and a first-of-a-kind net-zero microgrid • Increased investment enabling the continued develop
Slide 31: New Markets: Rolls-Royce SMR
New Markets: Rolls-Royce SMR New Markets reporting segment established for • Rolls-Royce SMR secured £490m of funding in 2021 Rolls-Royce SMR and • UK Government grant and third party equity investment helping to support SMR design Rolls-Royce Electrical through multi-year UK Generic Design Assessme
Slide 32: New Markets: Rolls-Royce Electrical
New Markets: Rolls-Royce Electrical New Markets reporting segment established for • Double world record success of the ‘Spirit of Innovation’ demonstrates pace of electrical Rolls-Royce SMR and technology acceleration and exciting applications for the Advanced Air Mobility Markets Rolls-Royce Electr
Slide 33: A better balanced and more sustainable business
Summary Improved financial Investing to drive performance Delivering on growth and driven by cost our commitments deliver sustainable reduction and value market growth A better balanced and more sustainable business 33 Investor Presentation © Rolls-Royce
Slide 34: FY 2021 supplementary data
3 FY 2021 supplementary data InvestorPresentation 34 Investor Presentation © © Rolls-Royce Rolls-Royce
Slide 35: Drivers of Civil LTSA balance change
Invoiced EFH receipts P&L revenue Reflects invoiced EFH receipts on long-term Driven by cost (e.g. shop visits) across large contracts across entire Civil LTSA-covered fleet engine, business aviation and regional fleets. LTSA balance: Recognised by contract, as costs incurred, at Drivers of Civil LT
Slide 36: 2022 guidance summary
Group: • Positive momentum in our financial performance in 2022 • Low-to-mid-single digit revenue growth 2022 guidance • Operating profit margin to be broadly unchanged summary • Modestly positive free cash flow in 2022, seasonally weighted towards H2. Defence: Civil Aerospace: • Modest revenue grow
Slide 37: Foreign exchange
• Achieved rate is not typically affected by short-term Rolls-Royce hedges spot rate movements unless new cover is taken; this transactional FX impact is usually diluted • $22 billion GBP:USD hedge book Foreign • Hedge book average rate is £/$1.53 exchange • $3 billion EUR:USD hedge book • Hedge boo
Slide 38: Foreign exchange: translational impact
UNDERLYING Foreign UNDERLYING OPERATING exchange: EXPOSURE REVENUE IMPACT PROFIT IMPACT Translational impact 2021 vs. 2020 £m Revenue Profit Inc FX FX Inc FX FX The impact of translational Group 10,947 (288) 414 (40) foreign exchange is driven by period average spot rates Civil Aerospace USD, EUR US
Slide 39: Civil revenues by engine type
Civil revenues Organic by engine type £m FY 2021 FY 2020 change1 Original Equipment 1,612 2,278 (29%) Large engine 1,297 1,696 (23%) COVID-19 impact seen Business aviation 310 574 (44%) across OE and Services V2500 5 8 (38%) Service 2,924 2,790 6% Large engine 1,958 1,608 22% Business aviation 654 4
Slide 40: Trent engine products
Trent engine products Market Engines in Engines on £m Airframe share* service order Trent 7000 Airbus A330neo 100% 130 550 Leading widebody backlog market share Trent XWB Airbus A350 100% 764 859 Trent 1000 Boeing 787 33% 604 122 Trent 900 Airbus A380 48% 168 1 Trent 800 Boeing 777 40% 176 0 Trent 7
Slide 41: Civil engine deliveries
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Civil engine By engine deliveries RB211 22B 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 RB211 524 2 5 7 0 5 4 0 0 0 0 0 0 0 0 0 0 0 0 0 RB211 535 14 6 0 2 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 RB211 Total 16 11 7 2 5 5
Slide 42: Civil engine in-service installed fleet
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Civil engine By engine in-service RB211 22B RB211 524 48 829 36 815 36 796 12 791 15 769 9 706 12 643 9 638 6 617 530 6 455 3 3 352 3 302 3 278 3 266 3 242 3 210 3 82 3 80 installed fleet** RB211 535 RB211
Slide 43: Civil in-service thrust base
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Civil in-service Thrust per engine thrust base By engine RB211 22B (lbs) 60,000 3 2 2 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 (millions lbs)** RB211 524 60,000 50 49 48 47 46 42 39 38 37 32 27 21 18 17 16 15 13 5
Slide 44: Civil Aerospace key drivers
Original equipment Installed engines Sale to airframer Civil Aerospace Aircraft key drivers deliveries Sale to operator / lessor Spare engines or Lease to operator into service Aircraft g o TotalCare $ per engine flying hour Aftermarket Aircraft in Service Time & material $ per event (e.g. shop visi
Slide 45: Civil Aerospace investment cycle
In-service Civil Aerospace Cash investment cycle generation Long investment cycles supported by: Access to government R&D funding for technology development OE Build and Delivery Risk and revenue sharing Cash consumption partnerships for programme investment Supply chain and services joint ventures
Slide 46: Aftermarket (LTSA) cash profit dynamics
Illustrative and simple worked example on 1 engine $m Year 1 Year 2 Year 3 Year 4 Year 5 Total Aftermarket (LTSA) cash profit Engine Flight Hours 20 20 20 20 20 dynamics Cash x $ per EFH 5 5 5 5 5 Flow EFH Receipts 100 100 100 100 100 500 Statement Change in LTSA balance - Major Service Costs - - -
Slide 47: Contacts
Contacts Isabel Green Head of Investor Relations isabel.green@rolls-royce.com Elena Prentice Investor Relations & ESG Manager elena.prentice@rolls-royce.com Sophie Parry Investor Relations Manager sophie.parry@rolls-royce.com 47 Investor Presentation © Rolls-Royce
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