Rolls Royce shares were soaring on Thursday after full year results beat expectations as the engine maker enjoyed a recovery in flying hours in 2022 and the resultant jump in operating profit and free cash flow.
Rolls Royce shares were up nearly 20% in the very early stage of Thursday’s trading session.
Underlying operating profit for the period jumped to £652m, up from £414m last year. Free cash flow rose £2bn to £505m.
In addition to the strong performance in 2022, Rolls Royce have issued a solid outlook for the year ahead. The company said they expect underlying operating profit to be in the region of £0.8-£1.0bn and free cash flow around £0.6-£0.8bn.
Despite the robust outlook, new CEO Tufan Erginbilgic believes Rolls Royce ‘are capable of much more’ and are embarking on a strategic review.
“It’s not uncommon for a new CEO to do some kitchen sinking. But when the incoming leader describes the existing business as a ‘burning platform’ you know you have serious issues,” said Charlie Huggins, Head of Equities at Wealth Club.
The strategic review will aim to focus on the most profitable lines of business and seek the improve efficiency.
“This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt. Our success will enable us to reward investors for their support and invest in future growth,” said Rolls Royce CEO Tufan Erginbilgic.