Rolls-Royce Holdings PLC confirmed on Thursday that it remains on track to meet its 2024 guidance, despite ongoing challenges in the aerospace supply chain.
Shares of Rolls-Royce fell 4.4% to 548.82 pence in London on Thursday.
The London-based manufacturer, which provides aero-engines for the aerospace and defense sectors, reaffirmed its expectation for an underlying operating profit between £2.1 billion and £2.3 billion for the year, reflecting a potential increase of up to 45% from £1.59 billion in 2023.
In the Civil Aerospace division, demand continues to be strong, with large engine flying hours rising 18% year-on-year for the ten months ending October 31. The company expects large engine flying hours in 2024 to reach between 100% and 110% of the pre-pandemic levels seen in 2019.
Rolls-Royce also reiterated its forecast for free cash flow in the range of £2.1 billion to £2.2 billion for 2024, marking a rise of up to 71% from £1.29 billion in 2023.
Supply chain issues
In the Defense sector, the company reported strong demand and significant progress across key platforms.
While recognizing the ongoing supply chain challenges in the aerospace industry, Rolls-Royce emphasized its focus on collaborating with 15 key suppliers to mitigate disruptions.
The company is scheduled to announce its full-year results for 2024 on February 27.
Rolls-Royce also confirmed its plan to reinstate shareholder distributions, aiming for a payout of 30% of underlying pre-tax profit for 2024, with a target payout ratio of 30% to 40% thereafter. The company last paid a dividend in January 2020, before the pandemic took hold.
“Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business continues with pace and intensity. The strong performance year-to-date gives us further confidence in meeting our 2024 guidance, despite a challenging supply chain environment. We are also making good progress toward our mid-term targets, with an early delivery of profit and cash flow improvements. However, there is more to be done as we expand Rolls-Royce's earnings and cash potential,” said Chief Executive Tufan Erginbilgic.
