Rolls-Royce reiterates 2024 guidance amid supply chain woes

ROLLS-ROYCE Holdings expects to meet its annual profit guidance as a surge in long-haul travel drive demand for engines and their maintenance and the company trims costs.

The UK engine maker reiterated its increased goal of reporting underlying operating profit of £2.1 billion (S$3.6 billion) to £2.3 billion and free cash flow of as much as £2.2 billion, according to a statement on Thursday (Nov 7). Supply chain issues are continuing to hamper production, and the company said it was focusing on 15 suppliers to improve performance. 

Under chief executive officer Tufan Erginbilgic, Rolls-Royce has put greater focus on profitable contracts as well as slashing costs internally. Those efforts are paying off, with the company announcing in August that it would reinstate dividend payments for the full year and the stock price almost doubling so far this year.

The company has a mid-term goal of achieving operating profit of £2.5 billion to £2.8 billion, an operating margin of 13-15 per cent, free cash flow of £2.8 billion to £3.1 billion and return on capital of 16-18 per cent by 2027. The delivery of those targets will be “front loaded,” Rolls-Royce said in the statement. BLOOMBERG