New Rolls-Royce boss launches strategic review despite profits rise

The new boss of Rolls-Royce has launched a sweeping review of the aircraft engine maker, pledging that there is “much more” to come after last year beat expectations, sending shares up more than 20%. Tufan Erginbilgic, who joined as chief executive on 1 January, said the FTSE 100 manufacturer had been underperforming financially for years and outlined key areas for reform that he said would deliver materially higher profit, cashflows and returns. The comments follow his warning to employees last month that Rolls-Royce is a “burning platform” that must transform to survive. Erginbilgic pledged to do better in future, even as the company reported a 57% increase in underlying profits to GBP652m, GBP505m generated in cash and revenues up 16% to GBP12.7b in 2022 – well above analysts’ expectations. Rolls-Royce shares rose by 24% on Thursday to 133p, their highest level for more than a year as investors welcomed the stronger than expected recovery. The company, which earns maintenance revenues depending on the hours flown by the engines it makes, said engine flying hours were at 65% of pre-pandemic 2019 levels and were expected to rise to 80-90% of 2019 levels this year thanks to the easing of travel restrictions in China. The pandemic presented a serious threat to Rolls-Royce as revenues from its civil aerospace business dried up. Yet Erginbilgic, who replaced the retiring Warren East, said Rolls-Royce had serious problems before Covid-19 struck, and outlined plans to increase the company’s profitability.<br/>