Rolls-Royce Holdings plc · LSE:RR.
Rolls-Royce — H1 2022 Earnings Presentation
26 slides from Rolls-Royce's earnings presentation, Aug 4, 2022
Slide 1: 2022 Half Year Results
Image to follow 2022 Half Year Results 4 August 2022 1 2022 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: 2022 Half Year Performance Summary
2022 Half Year Performance Summary Warren East Chief Executive 3 2022 Half Year Results © Rolls-Royce
Slide 4: Focused on operational and commercial drivers to address risks and deliver better performance
Performance summary Good progress Operational and Delivering with growth in commercial on our order intake, discipline commitments revenue and cash flow to manage external 2021 2020 inflation and supply chain challenges Focused on operational and commercial drivers to address risks and deliver 2020
Slide 5: Operational highlights
Operational highlights Key milestones for Pearl and First milestone achieved on the B-52 UltraFan development programmes programme in Defence Another record quarter for Progress in advanced air mobility order intake in Power Systems in New Markets 5 2022 Half Year Results © Rolls-Royce
Slide 6: Addressing risks and driving performance
Addressing risks and driving performance Financial summary • £1.1bn free cash flow improvement driven by commercial discipline and Revenue +4% increased flying hours £bn 6 2020 2021 20212022 • Managing impacts of rising inflation and ongoing supply chain 4 disruption with a sharper focus on pricing,
Slide 7: 2022 Half Year Financial Performance
2022 Half Year Financial Performance Panos Kakoullis Chief Financial Officer 7 2022 Half Year Results © Rolls-Royce
Slide 8: 2022 Half Year underlying results
2022 Half Year Underlying results 1 Organic £m 2022 H1 2021 H1 Change 2 underlying results Strong growth in Civil Aerospace and Power Systems revenues, offset by Revenue 5,308 5,227 223 lower Defence revenues against a Underlying performance tough comparative from continuing operations Gross profit
Slide 9: Civil Aerospace
OE deliveries flat, but Civil Aerospace Underlying results Organic with fewer large £m 2022 H1 2021 H1 Change % engines. Higher services revenues from Revenue 2,339 2,168 174 8% shop visits and LTSA catch ups Large engine operational inputs Gross profit 256 380 (127) (33%) Broadly flat gross 78 OE d
Slide 10: Operational inputs and Civil Aerospace medium-term outlook
Operational inputs OE deliveries Engine flying hours Shop visits Our commitments Cost, pricing & mix Utilisation, pricing & mix Cost, shop visit scope & mix made at the Civil Overheads & investments Aerospace investor day Civil Aerospace: Value drivers and medium-term term Value drivers outlook Maxi
Slide 11: Defence
Defence Underlying results Organic £m 2022 H1 2021 H1 Change % Lower spare engine sales and sales of high- Revenue 1,609 1,721 (164) (9%) margin legacy spare parts versus Gross profit 326 395 (77) (19%) H1 2021 Order intake Gross margin % 20.3% 23.0% (2.5)%pt £1.4bn up 8% Operating profit 189 269 (8
Slide 12: Power Systems
Power Systems Underlying results Organic £m 2022 H1 2021 H1 Change % Record order intake and very strong Revenue 1,371 1,181 229 20% revenue growth in all end markets, despite Gross profit 401 301 110 37% supply chain constraints Order intake Gross margin % 29.2% 25.5% 3.7%pt £2.1bn up 53% Operating
Slide 13: New Markets
New Markets Underlying results Organic Low revenue due to both businesses being £m 2022 H1 2021 H1 Change % in early stage Leveraging synergies development Revenue 1 2 - - across the group Gross loss (2) - - - Higher R&D investment we grow the workforce to Employees Operating loss (48) (28) (20) 71%
Slide 14: Summary funds flow: £68m free cash flow
£m 2022 H1 2021 H1 Change Underlying operating profit 125 307 (182) Profit from discontinued ops 68 (93) 161 Summary funds £0.5bn flow: Depreciation, amortisation and impairment 455 504 (49) 1 Operating performance £68m free cash improvement Civil Aero net LTSA contract Led by higher EFH receipts ou
Slide 15: Reaffirming our financial priorities
Reaffirming our financial priorities Deliver on our commitments Simplify how we report Invest wisely for the future 15 2022 Half Year Results © Rolls-Royce
Slide 16: Addressing the risks
by the COVID-19 pandemic Addressing the risks Deliver • Commercial discipline on pricing and contract management: ✓ Civil Aerospace: Contractual pass-through of inflation ✓ Power Systems: Volume and pricing growth ✓ Defence: Focus on pricing and long-term supply agreements • Controlling our cost bas
Slide 17: Simplifying FX hedging
USD by hedge the book, 2022-2026 COVID-19 pandemic Simplifying FX hedging Simplify: making our performance • New approach = a more tapered % across a rolling 5-year horizon more comparable • Simple, makes us more comparable, and allows proactive management • Each 1 $ cent change in the hedge rate im
Slide 18: A disciplined approach to investing
A disciplined approach to investing by the COVID-19 pandemic Invest Wisely New Markets Returns: Strict financial investment: Clear hurdles which target a synergies across the blend of near, medium group and long-term returns Deliver on our commitments Simplify how we report ESG and sustainability: R
Slide 19: 2022 Group guidance unchanged
2022 Group guidance unchanged by the COVID-19 pandemic 2 FY 2022 outlook and guidance • Confirmed group guidance despite a more uncertain environment • Profit margins and cash flows expected to improve in the second half Revenue growth • P&L tax rate in 2022 and 2023 expected to be high compared to
Slide 20: Securing a Sustainable Future
Securing a Sustainable Future Warren East Chief Executive 20 2022 Half Year Results © Rolls-Royce
Slide 21: Progressing towards a better future
Progressing towards a better future Our financial performance was severely impacted by the COVID-19 pandemic Looking ahead ✓ Rolls-Royce today is leaner, more agile and focused ✓ Value-conscious culture whilst maintaining excellence ✓ Developing more efficient, more durable and more sustainable prod
Slide 22: Transitioning to Net Zero
Transitioning to Net Zero Our financial performance was severely impacted by the COVID-19 pandemic A Group focused on Power Hydrogen • Expertise in turning stored Battery energy into useful power • Transition to Net Zero a continuation of our journey to provide critical power to a multitude of custo
Slide 23: Generating returns from Net Zero transition
Generating returns from Net Zero transition Our financial performance was severely impacted by the COVID-19 pandemic Hydrogen – technology pathway Hydrogen 2020s 2030s • Synergies created across the Group Hydrogen • Invest and market launch reciprocating engines timelines differ across commercial ap
Slide 24: Recognising and retaining talent
Recognising and retaining talent Our financial performance was severely impacted by the COVID-19 pandemic Our people We are bringing in new talent and diversity ▪ 48% increase in applications for Early Careers ▪ 58% graduate hires female, 36% from ethnic minority backgrounds We are creating an inclu
Slide 25: Focused on operational and commercial drivers to address risks and deliver better performance
Performance summary Good progress Operational and Delivering with growth in commercial on our order intake, discipline commitments revenue and cash flow to manage external 2021 2020 inflation and supply chain challenges Focused on operational and commercial drivers to address risks and deliver 2020
Slide 26: Q&A
Q&A 26 2022 Half Year Results © Rolls-Royce