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8-Nov-2019 12:41 PM

Rolls-Royce reports trading has improved, progress with efforts to improve working capital

Rolls-Royce provided (07-Nov-2019) a trading update related to group performance:

  • Trading has improved since the end of 1H2019;
  • Rolls-Royce now expects full year 2019 operating profit and free cash flow outcome towards the lower end of announced guidance ranges;
  • Company is progressing with efforts to reduce year end inventory from the elevated levels seen at 1H2018, although the pace has been slower than planned. Full year 2019 inventory is now expected to be at a broadly similar level to Dec-2018;
  • Rolls-Royce has "made strong progress" in efforts to improve working capital efficiency, with increased discipline around overdue debt collection and pursuing contractual entitlements. Along with discretionary cost control, strong contribution from working capital is helping to offset the material Trent 1000 cash costs Rolls-Royce is absorbing;
  • Company expects to generate at least GBP1 billion in free cash flow in 2020, underpinned by restructuring benefits, operational efficiency improvements, further efforts to reduce inventory and disciplined approach to capital allocation;
  • Company is confident in its mid-term ambition of GBP1 per share of free cash flow as Trent 1000 costs subside. [more - original PR]

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