Rolls-Royce Holdings plc · LSE:RR.
Rolls-Royce — FY2014 Earnings Presentation
36 slides from Rolls-Royce's earnings presentation, February 2015
Slide 1: Rolls-Royce Holdings plc 2014 Full-Year Results
Rolls-Royce Holdings plc 2014 Full-Year Results John Rishton, Chief Executive Trusted to deliver excellence
Slide 2: 2014 Full-Year Results - David Smith, CFO
2 Rolls-Royce Holdings plc 2014 Full-Year Results David Smith, Chief Financial Officer Trusted to deliver excellence
Slide 3: Group highlights of 2014 performance
Group highlights of 2014 performance 3 2013 2014 Order book (£ billion) 71.6 73.7 Excluding divested Energy business 70.4 73.7 Revenue (£ million) 15,505 14,588 Excluding divested Energy business 14,634 13,864 Profit before tax (£ million) 1,759 1,617 Excluding divested Energy business 1,695 1,620 R
Slide 4: Group revenue 2014 vs. 2013
Group revenue 2014 vs. 2013 4 -3% £ million (465) (776) 13,864 Trusted to deliver excellence •
Slide 5: Group profit 2014 vs. 2013
Group profit 2014 vs. 2013 5 £ million Flat ( ) ( ) ( ) ( ) (49) (49) 1,620 1,620 1,619 Trusted to deliver excellence
Slide 6: Group 2014 profit vs. free cash flow
Group 2014 profit vs. free cash flow 6 £ million 447 Trusted to deliver excellence
Slide 7: Group free cash flow 2014 vs. 2013
Group free cash flow 2014 vs. 2013 7 £ million 429 Trusted to deliver excellence
Slide 8: Group financial strength
Group financial strength 8 S&P: A/Stable Credit rating Moody’s: A3/Stable Maintain investment-grade rating Total liquidity £4.1 billion Strong liquidity Share buyback Spread to 2026 Debt maturities No material maturities 2015 – 2016 Foreign exchange and commodity Risk management hedging Trusted to d
Slide 9: Business Segment Performance
9 Business Segment Performance
Slide 10: Civil Aerospace
Civil Aerospace 10 £ million Drivers Order book • Up 5% Revenue • Strong OE growth £m Profit • Higher volumes • TotalCare contract catch up • Higher restructuring • Higher R&D Trusted to deliver excellence
Slide 11: Defence Aerospace
Defence Aerospace 11 £ million Drivers Order book • Up 12% Revenue • Lower volumes Profit • Lower volumes (30) • Cost reduction benefits (26) • Favourable mix shift towards aftermarket Trusted to deliver excellence
Slide 12: Power Systems
Power Systems 12 £ million Drivers Order book • Up 2% 2,877 2,865 2,733 • Revenue 2,720 • Foreign exchange • Sector mix changes Profit • Foreign exchange • Bergen performance 253 Trusted to deliver excellence
Slide 13: Marine
Marine 13 £ million Drivers Order book • Down 3% due to foreign exchange 1,848 1,845 1,845 1,712 1,709 1,709 Revenue • Foreign exchange • Oil price weakness Profit • Lower volumes • One-off charge • Adverse mix shift • Cost reduction 2013 figures restated to exclude Submarines, now part of Nuclear &
Slide 14: Nuclear & Energy
Nuclear & Energy 14 £ million Drivers (871) Ongoing Nuclear business 682 Order book 23 1,511 • Down 4% 1,458 £m Revenue • Submarines growth Profit 48 • Higher volumes • Efficiency improvements • Non-repeat of 2013 charges 2013 figures restated to include Submarines, previously in Marine Trusted to d
Slide 15: More uncertain near-term environment
More uncertain near-term environment 15 Oil prices GDP forecasts Geopolitics Metal prices Currency volatility Trusted to deliver excellence
Slide 16: 2015 Group guidance
2015 Group guidance 16 Guidance at constant 2014 foreign exchange (excluding Energy) 2014 2015 Guidance Revenue (£ billion) 13.9 13.4 – 14.4 Profit before tax (£ million) 1,620 1,400 – 1,550 Free cash flow (£ million) 447 200 +/- 150 Earnings per share (p) 65.3 60 – 66 Results expected to remain wei
Slide 17: 2015 Segment guidance
2015 Segment guidance 17 Guidance at constant Revenue (£ million) Profit (£ million) 2014 foreign exchange Aerospace 2014 2015 2014 2015 Civil Aerospace 6,837 7,000 – 7,300 942 800 – 900 Defence Aerospace 2,069 1,900 – 2,100 366 360 – 410 Land & Sea Power Systems 2,720 2,500 – 2,750 253 200 – 250 Ma
Slide 18: Roadmap: Our transformation
Roadmap: Our transformation 18 2011-2013 2014-2017 2018-2020 Began focus on 4Cs Transforming our Delivering the benefits business; growing our installed base Growing installed base, Customer Rising Civil Large Engine cash & margins deliveries Concentration 20% footprint reduction Restruc
Slide 19: Focus on costs – operational efficiency
Focus on costs – operational efficiency 19 Focus on cost and collaboration with suppliers on OE and spares Strong programme on lifecycle costs Deployment of lean processes throughout the business Reducing indirect costs and improving efficiency Trusted to deliver excellence
Slide 20: Focus on costs – transformation of industrial base
Focus on costs – transformation of industrial base 20 Significant investment in new capacity, technology, and capability Multi-year program through 2020 Aero restructuring announcement Operating leverage Land & Sea cost focus increasing Trusted to deliver excellence
Slide 21: Focus on free cash flow
Focus on free cash flow 21 Near-term Medium-term Investment OE margins improving as exit launch phase Restructuring Aftermarket revenue and cash Low-margin OE at launch rising Net working capital growth Capital expenditure efficiency Cost improvement actions Inventory efficiencies Trusted to deliver
Slide 22: Summary
Summary 22 2014 challenging year 2015 – 2017 continues key transformation phase Preparing for growth: Civil Large Engine volumes double Multi-year transformation programme through end of decade Long-term model very attractive Trusted to deliver excellence
Slide 23: Rolls-Royce Holdings plc 2014 Full-Year Results
23 Rolls-Royce Holdings plc 2014 Full- Year Results John Rishton, Chief Executive Trusted to deliver excellence
Slide 24: Key messages
Key messages 24 Fundamentals strong – continuing investment in future growth Addressing growing pains Taking decisive action to build a stronger company Trusted to deliver excellence
Slide 25: Customer
Customer 25 Improving quality, delivery, reliability and responsiveness Customer awards Airbus Supply Chain and Quality Improvement Award US Air Force: First tier supplier US Defense Logistics Agency: First tier supplier Aviation International News: First place for quality of support Trusted to deli
Slide 26: Concentration
26 Concentration Sharpening our focus Sold Bought Energy Power Systems Fuel Cells Aero Engine Controls Tidal Generation R Brooks RTM 322 HyperTherm Well Intervention SmartMotor Trusted to deliver excellence
Slide 27: Cost & Cash
Cost & Cash 27 Making progress across the business Progress across the Group Group gross margin up 1.7pp Time on wing Trent 700/Trent 800 doubled Defence return on sales improved Inventory reduced £140 million Indirect headcount reduced 18% Aero restructuring: 2,600 headcount reduction Operational f
Slide 28: Civil Large Engine fleet today
28 Civil Large Engine fleet today Russia & Northern Europe CIS Eastern Europe China North America Southern Europe North Middle Asia North East Africa Central America Central Indian SE Asia Africa Subcontinent 2014 Latin America Installed Southern Australasia Africa Engine Count 4 3 0 0 Trusted to de
Slide 29: Civil Large Engine fleet in 2024
Installed engine base 2014 29 Civil Large Engine fleet in 2024 Installed engine base 2024 Northern Europe Russia & CIS E. Europe North America S. Europe China North Asia North Africa Middle East SE Asia Indian Subcontinent 2024 Latin America Installed Southern Engine Count Africa Australasia 7 5 0 0
Slide 30: Long-term growth driven by installed thrust
30 Long-term growth driven by installed thrust Trusted to deliver excellence
Slide 31: Group logic
Group logic 31 Industrial • Advanced engineering capability Commercial • Scale, breadth, and balance Strategic • Long-term growth markets Trusted to deliver excellence
Slide 32: Long-term global trends underpin profitable growth
Long-term global trends underpin profitable growth 32 Source: BP Energy Outlook Trusted to deliver excellence
Slide 33: Growth in widebody fleet
Growth in widebody fleet 33 9,116 New deliveries Heritage fleet Source: Airbus GMF app & Global Market Forecast ‘Flying on demand 2014 2033’ Trusted to deliver excellence
Slide 34: Key messages
Key messages 34 Fundamentals strong – continuing investment in future growth Addressing growing pains Taking decisive action to build a stronger company Trusted to deliver excellence
Slide 35: Q&A
Q&A 35 John Rishton Chief Executive David Smith Chief Financial Officer James Guyette President, Rolls-Royce North America Inc. Colin Smith Director, Engineering & Technology Tony Wood President, Aerospace Lawrie Haynes President, Land & Sea Trusted to deliver excellence
Slide 36: Safe harbour statement
Safe harbour statement 36 This Results 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 projecti