Rolls-royce Holdings Plc · LSE:RR.
Rolls-royce — FY2022 Earnings Presentation
24 slides from Rolls-royce's earnings presentation, Feb 23, 2023
Slide 1: 2022 Full Year Results
2022 Full Year Results 23 February 2023 © 2023 Rolls-Royce
Slide 2: Safe harbour statement
Safe harbour statement This 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 projections with re
Slide 3: Agenda
Agenda 1 Welcome Tufan Erginbilgic, CEO 2 FY 2022 results Panos Kakoullis, CFO 3 Stronger Future Tufan Erginbilgic, CEO Page 3 © 2023 Rolls-Royce
Slide 4: Welcome
Welcome Tufan Erginbilgic CEO Page 4 © 2023 Rolls-Royce
Slide 5: Full Year 2022 Results
Full Year 2022 Results Panos Kakoullis CFO Page 5 © 2023 Rolls-Royce
Slide 6: 2022 Full year underlying results
2022 Full year underlying results Underlying results Organic Organic Higher Civil Aerospace shop visit and spare engine £m 2022 2021 Change1 Change %1 volumes and Power Systems growth Revenue 12,691 10,947 1,534 14% Gross profit 2,477 1,996 436 22% Gross margin % 19.5% 18.2% 1.3%pt Underlying operat
Slide 7: Civil Aerospace
Large engine Total Civil Aerospace Civil Aerospace operational inputs operational inputs 190 248 10.0m 355 1,044 13.2m OE Major LTSA engine OE Total LTSA LTSA engine deliveries shop visits flying hours (EFH) deliveries shop visits flying hours (EFH) Underlying results Organic Organic 2022 2021 £m Ch
Slide 8: Defence
Order intake Order backlog Defence £5.4bn Up 131% £8.5bn 2023 sales cover 1.5x book to bill c.86% Underlying results Organic Organic 2022 2021 £m Change Change % Underlying revenue splits Revenue 3,660 3,368 78 2% 13% Gross profit 726 721 (28) (4%) 33% Gross margin % 19.8% 21.4% (1.3)%pt 45% 21% 55%
Slide 9: Power Systems
Order intake Order backlog Power Systems £4.3bn Up 29% £4.0bn 2023 sales cover 1.3x book to bill c.76% Underlying results Organic Organic 2022 2021 £m Change Change % Underlying revenue splits Revenue 3,347 2,749 626 23% 10% Gross profit 918 778 148 19% 31% 35% Gross margin % 27.4% 28.3% (0.9)%pt 34
Slide 10: New markets
Employees R&D Spend New markets c1,000 (+80% vs FY21) £108m (+£40m y/y) (FTE at period end) Underlying results Organic Organic 2022 2021 £m Change Change % £490m SMR committed funds £108m R&D spend Revenue 3 2 1 50% 10% Gross (loss)/profit (1) 1 (2) 38% Operating loss (132) (70) (62) (89)% 43% Tradi
Slide 11: Summary funds flow
Summary funds flow £m 2022 2021 Change Underlying operating profit 652 414 238 Operating profit from discontinued operations Depreciation, amortisation and impairment 86 953 (43) 971 129 (18) 1 £1.2bn Operating performance Movement in provisions (23) (136) 113 improvement Movement in Civil LTSA bala
Slide 12: Balance sheet
Balance sheet Net Debt Progression (including leases) Illustrative, not drawn to scale £3.3bn £0.5bn £5.2bn £1.4bn 2021 Disposal proceeds FCF 2022 Net Debt in 2022 2022 Net Debt Target to return to investment grade credit rating Page 12 © 2023 Rolls-Royce
Slide 13: Stronger Future
Stronger Future Tufan Erginbilgic CEO The information in this document is proprietary and confidential to Rolls-Royce and is available to authorised recipients only – copying and onward distribution is prohibited other than for the purpose for which it was made available. Rolls-Royce content only. P
Slide 14: Observations and key issues
Observations and key issues Rolls-Royce has potential to achieve far more Underlying Free Cash Flow EBIT Margin Return on capital Credit rating operating profit Post tax Min £(4,255)m – Min £(2,008)m – Min (17.6)% – Min (19.5)% – Moodys Ba3 Max £873m Max £808m Max 5.2% Max 4.6% Fitch BB - 2018 - 202
Slide 15: Rolls-Royce proposition: A stronger business
Rolls-Royce proposition A stronger business Focus on profitable performance and operational efficiency 1 High quality and competitive business EBIT margin and returns Growing cash from operations and disciplined 2 Growing sustainable cash flows capital investment 3 Strong balance sheet and growing R
Slide 16: Priorities to deliver on our potential
Priorities to deliver on our potential Significantly Deliver Generate cash, Develop a clear Play a key improve efficiency reduce debt and granular role in the operating profit improvements and improve strategy energy transition and cash shareholder returns Safety – people and product Page 16 © 2023
Slide 17: Transformation programme – overview and governance
Transformation programme – overview and governance Discipline and governance to drive sustainable change Steering Committee Transformation Planning Group Central Transformation Office Efficiency & Simplification Commercial Optimisation • Organisation and footprint efficiencies • Contract profitabili
Slide 18: Key building blocks - efficiency and simplification
Key building blocks - efficiency and simplification Sustainable cost efficiency delivery will unlock synergies and reduce our Total Cash Costs/Gross Margin Operating Leverage 3 Workstreams: (Total Cash Costs*/Gross Margin) 1 Organisational design 2 Footprint efficiencies Best in class 3 Third party
Slide 19: Key building blocks - commercial optimisation and working capital
Key building blocks - commercial optimisation and working capital Commercial Optimisation Working Capital £25bn The right reward for the value delivered and the risks • Structural working taken for our customers capital release targeted Payables Focus on Civil Aerospace and Power Systems • £2bn incr
Slide 20: Key building blocks – strategic review
Key building blocks – Our new capital allocation framework strategic review Higher priority on deleveraging the balance sheet and shareholder payments. Cash flow - Safety capex and engineering spend • Prioritise investment opportunities - Contractual committed investment = • Central capital allocati
Slide 21: Guidance and outlook
Guidance and outlook 2023 group guidance Operating profit £0.8bn - £1.0bn FCF £0.6bn - £0.8bn Based on… Civil large EFH at 80%-90% of 2019 level Renewed and intensified focus on performance Total Civil shop visits approx. 1,200-1,300 and efficiency Continued recovery in our end markets, notably Civi
Slide 22: Key messages
Key messages Aim to create a high performing, competitive, resilient and growing business Significant opportunity so expand our cash generation and profitability Already in action to improve underlying performance We will set a granular strategy with mid term targets Page 22 © 2023 Rolls-Royce
Slide 23: Q&A
Q&A Questions will be taken live in the room. For those on the webcast please use the questions functionality to submit your questions which will be read out if time allows or responded to by the IR team after the call. The information in this document is proprietary and confidential to Rolls-Royce
Slide 24: Slide 24