2019 - rolls-royce holdings/media/files/r/rolls-royce/documents/... · h1 18 reduced oe cash...

2019 Half Year Results © Rolls-Royce

6 August 2019

2019 Half Year Results


2

Jennifer Ramsey Head of Investor Relations


Agenda for today

3

Jennifer Ramsey Introductions

Highlights & Strategy Warren East

Financial Review Stephen Daintith

Business Outlook Warren East


4 2019 Half Year Results © Rolls-Royce

Notices

Safety Safe Harbour

Mobile Phones


5

Warren East Chief Executive

Highlights

2019 Half Year Results © Rolls-Royce 2019 Half Year Results © Rolls-Royce

Group Overview

6


7

Results summary

Underlying core revenue

Underlying core operating profit

Core underlying EPS

Underlying core PBT

Core free cash flow

‘Dividend’ per share

£7.2bn 7 %* £203m

(1.4)p

+33%*

£(391)m H1 2018: £10m

4.6p H1 2018: 4 . 6 p

* Organic change

Further progress

H1 2018: 3.1p

£94m £5m*


8

2019 Half Year Results overview

Civil Aerospace Good engine flying hour growth; OE loss reduced; technical fixes on Trent 1000 progressed; material Trent 7000 production ramp-up

Power Systems Healthy progress in H1 with sales outperforming GDP growth; strong growth in LTSA revenues; book-to-bill ratio 1.1

Defence Good H1; strong order intake and customer deposits; operational improvements in US facilities; increased investment in new products and technologies

ITP Aero Good revenue growth; lower profit largely phasing

Restructuring In line with original plan; run-rate cost savings of £134m per annum achieved to date

Financial Good revenue growth; FCF reflects typical seasonality; improved net cash position


9

Increase in CROIC

Focus on value creation

Improve returns on current invested capital - target at least 15% through the cycle

Ensure returns on new investments support CROIC ambition

Strengthen balance sheet – improve credit rating

Fund organic investment – brought more rigour to internal process

Free cash flow ambition

2018 2017

£0.3bn £0.6bn

Mid-term ambition

2019 2020

~£0.7bn

At least £1bn

Payment to shareholders

Committed to restoring shareholder payments as FCF grows

Aspire to mid-term dividend cover of 2.5x through the cycle

Disciplined allocation

>£1 FCF per share


10

Our commitment to sustainable growth

Increase efficiency of existing products

Develop breakthrough technologies

Champion electrification and build capabilities

Decrease greenhouse gas emissions

Dedicated energy reduction programme across all sites

Closed loop manufacturing processes

Safety & ethics are non-negotiable

Make our organisation as world-leading as our technologies

Enable global mindset through diversity & inclusion

Products Operations People

The drive for low carbon power

Creating a sustainable future through a pragmatic and balanced approach to the present


11

Simplification

Enabling change

Portfolio

Systems

Processes

People

Significantly reduce central costs

Empowered businesses, more control of own costs

Shared vision and clear accountability

Run rate cost savings

Cumulative net headcount reduction

FY 18 H1 19

£81m

£134m

FY 18 H1 19

~1,300 ~1,600

Key objectives

~2,700

FY 19e

To create a stronger more competitive business

2019 Half Year Results © Rolls-Royce 2019 Half Year Results © Rolls-Royce

Business update

12


13

Civil Aerospace

Progress across a number of key metrics; successful transition to Trent 7000 production from Trent 700

Widebody EFH growth

Lower OE unit loss

Trent 7000 Trent XWB Business Aviation

13% Reduction through pricing and cost out

Cumulative four million flying hours with 562 engines in service and 99.9% dispatch rate

Delivered first Pearl 15 engine ahead of entry into service later in year

Material ramp up achieved in production in period

8% Ahead of air traffic growth


14

Trent 1000 update

Trent 1000 pack B/C

Trent 1000 TEN high pressure turbine blade

Continued progress with technical solution

Cash cost in H1 2019 of £219m (H1 2018: £107m)

Incremental cash cost increase

2019: £450m - £500m

2020: declining by £50m - £100m

Stepping down materially thereafter

Limited to around a third of the TEN fleet

Costs expected to be within bounds of normal programme risk

Progressing with test of re-designed blade

Operational update

MRO capacity increased

Pack C IPC replacement blades being fitted; AOG reducing

Trent 1000 TEN and Pack B IPC re-design underway

Pack B

Pack C

TEN

Trent 1000 variants


15

Power Systems

Healthy progress with increasing penetration of services; good demand for power generation products for data centres

Microgrid progress

Product innovation

Order intake

Operating profit

Total solutions

ABB collaboration on microgrid solutions

Moving portfolio from product to systems and LTSA

£1.7bn Book-to-bill ratio 1.1

+20% increase reflects increased sales volume Environmental

performance improvements driving growth


16

Defence

Strong order intake and good operational performance with increased investment in new products and technologies

Strong order intake

Modernisation

F-35 LiftSystem

Future products

Directed energy

60% of Indianapolis production now moved to new facilities

1.5 Book-to-bill ratio Driving higher

OE sales with LRIP 11 & 12 agreed

Successful demonstration of power and thermal management system

Bell vertical lift

Tempest

Hypersonics


17

ITP Aero

Milestones

Technologies

Revenue growth

Profit headwinds

Expansion

Additive manufacturing cell installed to support new production

23% led by progress in civil aerospace OE

(18)% Temporary headwinds from phasing of mix in H1 to unwind in FY

New and extended facilities in Spain and Mexico

First test of UltraFan intermediate pressure turbine

Good revenue growth, expansion of externals business


18

Stephen Daintith Chief Financial Officer

Financial Review


Agenda for today

19

01 Half year results

02 Business unit review

03 Guidance



Half year results


21

£m

Civil Aerospace x

Power Systems x

Defence x

ITP Aero x

Corporate / eliminations x

Core business x

Non-core business x

Group underlying result x

Core & Non-core business reporting format

Non-core business Legacy energy assets

Disposal completed of:

Commercial Marine

Power Development

Core business Key focus of Group operations

A reminder of our reporting format

Commentary is provided on an underlying basis. All percentage or absolute change figures are on an organic basis unless otherwise stated


22

Group underlying results

Good revenue growth and operating profit improvement; typically seasonal H1 cash outflow

£m Underlying

Revenue Organic change

Underlying op. profit

Organic change

Civil Aerospace 4,018 +11% (21) +86

Power Systems 1,553 +6% 96 +20%

Defence 1,494 +2% 173 +2%

ITP Aero 457 +23% 32 -18%

Corporate/eliminations (309) - (77) -

Core business 7,213 +7% 203 +33%

Non-core business* 140 - - -

Group underlying result 7,353 +7% 203 +32%

Free cash flow H1 2019 H1 2018

Core (391) 10

Group (429) (72)

*Non-core includes Commercial Marine, Rolls-Royce Power Development, L’Orange and other smaller non-core businesses


23

Core business underlying results

£m H1 2019 H1 2018 Change Organic change

Core underlying revenue 7,213 6,680 +8% +7%

Core underlying gross profit 995 897 +11% +10%

Gross margin % 13.8% 13.4% +40bps +30bps

Commercial & administrative costs (516) (467) +10% +10%

Restructuring (9) (12) -25% -25%

Research & development costs (314) (296) +6% +5%

Joint ventures & associates 47 24 +96% +80%

Core underlying operating profit 203 146 +39% +33%

Underlying operating margin 2.8% 2.2% +60bps +60bps

Financing costs (109) (65) +68% +68%

Core underlying profit before tax 94 81 +16% +6%

Core free cash flow (391) 10 (401)

Core CPS (20.7)p 0.5p (21.2)p

Further progress


24

Continued underlying growth in core OE & LTSA revenue

13%

28%

8%

4%

OE

LTSA

Other service

Strong organic LTSA growth of 13% across our core businesses


OE revenue 3,350 3,201 +5% +4%

LTSA service revenue 1,868 1,645 +14% +13%

Other service revenue 1,995 1,834 +9% +8%

Core underlying revenue 7,213 6,680 +8% +7%

Gross margin (%) 13.8% 13.4% +40bps +30bps

26%

46%


25

Progress on key levers

Reduced avg. OE loss per engine

Improved aftermarket cash

margin

Bending the fixed cost curve

£0.2m improvement per engine

H1 2019 saw further progress delivered on key drivers of cash flow improvement

£0.1bn improvement

110bps lower as % sales

~£150m/£500m to date

~£300m/£750m to date

~340bps/800bps to date

Progress achieved towards CMD targets*

* 2018 CMD baseline is FY 2017


26

Widebody avg. loss per engine

Widebody deliveries

H1 18

Reduced OE cash deficit per engine

H1 18 H1 17

7 Spare

H1 17 H1 19

Successful transition to Trent 7000

Trent XWB-84

Trent 700

Trent 1000

Trent 900

Trent 7000

Trent XWB-97

H1 2019 OE engine sales volumes

257 H1 2019

£0.2m improvement

per engine

(£1.7m) (£1.5m)

(£1.3m)

202 Installed

240 Installed

19 Spare

H1 19

239 Installed

18 Spare

14 Shipped

H1 18 H1 19

21%

13%

33%

23%

7% 3 %

Engines invoiced

41 Trent 700s

54 Trent 7000s

7 Trent 700s


27

Improved aftermarket cash margin in Civil Aerospace

On path to our mid-term ambition

£0.8bn

H1 2018

In-service fleet

Major refurbs

Check & repair

Other AM costs

H1 2019

£0.7bn

4,567 engines

6.9m EFHs

137 SVs

242 C&R*

4,897 engines

7.5m EFHs

141 SVs

295 C&R*

Underlying widebody aftermarket cash margin (pre-Trent 1000 costs)

Invoiced EFH

*Check & repair visits include Trent 1000 in-service related visits

Note chart illustrative. Not to scale

£0.1bn improvement Income

Costs

U/L cash margin


28

R&D and capex as % of sales will continue to fall reflecting:

– Civil Aerospace has passed peak R&D, following 70% increase since 2010

– Headcount reduction

– OE volume related capex has passed its peak

While enabling rising R&D in Defence and on electrical technologies

Bending the fixed cost curve

Mid-term ambition

Core capex as % sales Core cash R&D and certification costs as % sales

H1 19 H1 18

6.0%

7.1% 7.8%

Mid-term ambition

H1 19 H1 18

4.0%

4.8% 5.0%

Adjusted underlying core C&A as % sales

Mid-term ambition

H1 19 H1 18

5.0%

7.2% 7.4% “Combined 23% of sales in 2017, down to 15% over the mid-term”

110bps lower as

% of sales


29

Progress on restructuring

Group restructuring announced in June 2018

Activity during the half ~540 gross reduction in H1 2019, ~300 net reduction

Consultation underway; expect ~1,400 net reduction in FY 2019

On track for 4,600 net headcount reduction by 2020

Provisions now largely built against P&L element of costs

£134m run-rate savings achieved to date

FY18 actual

H1 19 actual FY19 FY20

Total Target

Gross headcount reduction ~2,000 ~540 ~2,600 ~2,000 ~6,600

Net headcount reduction ~1,300 ~300 ~1,400 ~1,900 ~4,600

Cumulative net headcount reduction ~1,300 ~1,600 ~2,700 ~4,600

Cash cost £70m £66m ~£200-230m ~£130-160m ~£500m

P&L charge £223m £39m

Run-rate savings at period end £88m £134m ~£400m

Provisioning now largely complete


30

Summary funds flow

£m H1 2019 H1 2018 Change

Underlying operating profit 203 141 62

Depreciation and amortisation 511 315 196

Lease payments (capital plus interest) (184) - (184)

Capital expenditure (PPE & intangibles) (622) (669) 47

Change in inventory (433) (461) 28

Change in net receivable/payable 391 130 261

Civil Aerospace net LTSA balance change 128 487 (359)

Of which underlying change 120 295 (175)

Of which impact of contract catch-ups 8 192 (184)

Movement on provisions (271) 1 (272)

Net interest received and paid (45) (36) (9)

Other (8) 66 (74)

Trading cash flow (330) (26) (304)

Pension contribution vs P&L charge 1 31 (30)

Tax paid (100) (77) (23)

Group free cash flow (429) (72) (357)

Of which: core free cash flow (391) 10 (401)

Core FCF

£(391)m

5 key drivers:

Higher profit

Inventory build

Higher customer deposits

Further growth in LTSA receipts

Trent 1000 costs


31

Key drivers of cash flow performance

Since the year-end higher inventory has offset a favourable impact from receivables and payables, driven by customer deposits in Defence

Inventory £(433)m

Outflow reflecting seasonality and planned inventory build in Civil Aerospace and Power Systems

At least £500m unwind in H2

Receivables and Payables £391m

Inflow largely due to customer deposits and advances of c.£300m, driven by recent order wins in Defence

Broadly neutral trade receivables: growth offset by better overdue debt collection

Underlying Operating Profit £203m

Improved underlying operating profit (+£62m YoY)

Further improvement expected in H2


32

Key drivers of cash flow performance Impacted by the absence of aftermarket deposits and greater provision consumption as we make progress on Trent 1000 issues

Provision utilisation £(271)m Increase year-on-year largely reflected utilisation of Trent 1000 exceptional

provision (total H1 2019 in service cash costs of £219m)

H1 2018 Trent 1000 costs not covered by provisions, which were established on 30th June 2018

Remainder due to increased utilisation of other provisions

Underlying increase in deferred EFH revenue £120m

Continued contribution from higher invoiced Engine Flying Hours in excess of revenue recognised as our installed base grows

£(175)m lower YoY, primarily due to absence of material aftermarket deposits seen in H1 2018 upon customer conversions to TotalCare


33

Inventory: £(433)m

£4.8bn at period end to reduce by at least

£0.5bn in H2

Clear pathway to reducing inventory in H2

Inventory build for H2 deliveries, including 14

engines currently on airframer assembly line.

Aftermarket parts build-up to support H2 shop visits.

H1 inventory build of ~£433m to unwind in H2

Civil Aerospace engines awaiting

invoice

Power Systems Project delay

Power Systems Mix impact

Power Systems Production phasing

Power Systems Globalisation

strategy

Civil Aerospace

~£0.2bn

Power Systems

~£0.2bn

China sales growth in H2 supported by backlog. Consumption of buffer stocks in India ahead of local production of S1600 engine

Higher deliveries of full systems in H2

Major projects will invoice in H2

Unwinds with more balanced Q3/Q4 phasing vs prior years

Reduction in finished engines held in inventory. Reduced aftermarket parts inventory as LTSA shop visits increase in H2

Earlier parts purchase to smooth H2 production

Inventory build due to project delays

Inventory build to support long lead-time

powergen systems

Temporary build-up to support production

localisation and sales


34

Deferred revenue reflects difference between invoiced EFH receipts and P&L revenues traded

Invoiced EFH receipts

Reflects invoiced EFH receipts on long-term contracts across entire Civil LTSA-covered fleet:

Large engine (7.5m EFH in 1H 19) + business aviation + regional*

P&L revenue

Driven by cost (shop visit & other costs) across large engine, business aviation and regional fleets

Recognised by contract, as costs incurred, at relevant contract margins

YoY +£243m

2019 Opening balance (LTSA net creditor)

£4,487m

Closing balance (LTSA net creditor)

£4,730m

Invoiced EFH

receipts

£1,704m

P&L LTSA revenue

£1,576m FX

£115m

*excludes V2500 as not covered by a LTSA

Total

+£128m

Of which

£8m contract catch-ups

Of which

£120m underlying

Civil Aerospace: Drivers of LTSA balance


35

Group funding H1 2019 group free cash outflow £(429)m

Completed disposal of Commercial Marine, net proceeds of £451m

Completed disposal of Power Developments, net proceeds to date of £29m

No material maturities until October 2020

Reiterating ambition to return to a single A rating

Debt maturity (£m)

2019 20 21 22 23 24 25 26 27 28 29

Successful actions strengthen position in H1 2019

Drivers of £42m higher financing cost:

IFRS 16 driving lease costs to £(39)m, compared to £(2)m in 1H 2018

£m H1 2019 FY 2018

Cash 4,182 4,980

Debt 6,119 4,369

Net cash/(debt) (1,937) 611

Undrawn facility 2,500 2,500

Cash 4,182 4,980

Liquidity 6,682 7,480

0

200

400

600

800

1000


36

Capital allocation priorities

Committed to restoring shareholder payments to an appropriate level over time; FCF key driver of growth

Aspire to 2.5x FCF / dividend cover through the cycle

View in the context of overall capital allocation priorities

Fund organic Investment: drive growth & technology leadership

Strong balance sheet: improve credit rating

M&A: disciplined & selective

Payment to shareholders: increase dividend as FCF grows

H1 2019 Interim payment maintained;

4.6p per share



Business unit review 02


38

Underlying revenue – £4,018m, T&M services growth and +3% OE revenue; LTSA +18%

Gross profit – Improved OE losses and lower contract catch-ups of £1m (H1 2018: £(154)m), partially offset by weaker LTSA margin as expected

Operating loss – improved to £(21)m. £22m lower net R&D capitalisation driving £5m higher R&D charge; C&A cost increase impacted by prior year credits

Civil Aerospace


OE revenue 1,570 1,530 +3% +3%

Services – LTSA 1,576 1,328 +19% +18%

Services - T&M/other 872 742 +18% +17%

Underlying revenue 4,018 3,600 +12% +11%

Gross profit 276 175 +58% +54%


Operating loss (21) (112) +91 +86

Operating margin % -0.5% -3.1% +260bps +240bps

Strong growth in revenue. Operating loss reduced by

£86m

Moving towards profitability


39

Civil Aerospace

Underlying revenue

£4,018million

39%

39%

22%

OE 3%

T&M & other

17%

LTSA 18%

By type

By end market

70%

15%

11%

4%

Large engines 13%

Business 17%

Regional 5%

V2500 3%

OE revenue growth 3% Good widebody OE growth +6% and strong growth in business jets +9%. Material decline in V2500 OE

Services revenue +18% 20% growth in large engine services led by higher shop visit volumes; business jets 29% growth led by shop visits and positive catch up adjustments

In service fleet and flying hours Large engine in service fleet up 7% YoY to 4,897 engines. Large engine flying hours +8% on a challenging comparison base

Outlook FY19: Around 10% revenue growth; profit closer to breakeven. Improved cash generation in H2 as inventory unwinds

Good growth in widebody and business jet OE, decline in V2500

Strong services revenue growth of 18%, with widebody engine flying hours up 8%

Outlook - closer to breakeven profit for FY; inventory reduction in H2


40

Underlying revenue: 6% growth in OE and 7% in Services; Good demand for power generation products for data centres; Strong growth in LTSA revenues, up 27% YoY

Operating profit: +20% YoY to £96m, led by volume growth and improved product mix

Power Systems


OE 994 945 +5% +6%

Services 559 526 +6% +7%


Gross profit 389 354 +10% +10%


Operating profit 96 80 +20% +20%

Operating margin % 6.2% 5.4% +80bps +70bps

Good revenue and profit growth driven by end market strength


41

Power Systems overview

Underlying revenue

£1,553million

64%

4%

32%

24%

27%

35%

9%

5%

OE 6%

T&M & other

5%

PowerGen 37%

Defence/other 11%

LTSA 27%

By type

By end market

Industrial 4%

OE revenue growth 6% Strong demand for power generation products in data centre markets. Growth despite non-recurrence of 2018 pre-buy in construction & agriculture markets

Services revenue +7% Increase in installed base, plus good progress in LTSA growth strategy

Good order intake Order intake of £1.7bn

Outlook Good order coverage for remainder of year. FY19: mid single digit revenue growth; c.100bps higher operating margins led by improved product mix

Marine 10% Civil Nuclear

8%

Increased OE volumes and services growth

Book to Bill 1.1 times

Confident full year outlook, with inventory reduction through H2


42

Defence


OE 653 608 +7% +4%

Services – LTSA 277 250 +11% +7%

Services – T&M/other 564 557 +1% -2%


Gross profit 295 281 +5% +1%

Gross margin (%) 19.7% 19.9% -20bps -10bps

Operating profit 173 162 +7% +2%

Operating margin (%) 11.6% 11.4% +20bps -10bps

Underlying revenue: marginally higher. OE growth in combat and naval, partially offset by lower Trent 700 MRTT volumes

Gross profit: modestly higher. Lower UK combat profits offset by benefits from operational efficiency in our US facilities

Operating profit: 2% growth - increased gross profit from higher revenues offset by greater R&D spend as we invest in future technology

Solid performance; gross profit higher

Operating margin stable after higher R&D spend on future technology


43

37%

22% 21%

8%

12%

Defence

Solid OE revenue +4% Combat and naval growth, partially offset by lower transport volumes

Services revenue +1% Increased transport LTSA sales offset by lower naval T&M (phasing)

Strong orders of £2.3bn, a 1.5 times book to bill Large order in submarines, closing order backlog of £7.5bn

Increased R&D investment in future products

Outlook FY19: stable revenue, modest operating margin decline reflecting R&D investment in future technologies, partially mitigated by increased operational efficiencies

Transport 2%

Combat 15%

Submarines 1%

Naval Marine 2%

Other 14%

Stable revenues and margins, with investment ramping up

Underlying revenue

£1,494million

44%

19%

37%

OE & Development 4%

T&M & other

2%

LTSA 7%

By type

By end market


44


OE 400 290 +38% +40%

Services 57 85* -33% -32%

Underlying revenue 457 375 +22% +23%

Gross profit 80 85 -6% -4%

Gross margin (%) 17.5% 22.7% -520bps -490bps

Operating profit 32 40 -20% -18%

Operating margin (%) 7.0% 10.7% -370bps -350bps

ITP Aero

Underlying revenue: growth driven by higher Civil Aerospace OE volumes across Trent and P&W programmes; aftermarket decline due to phasing

Gross profit: decline of 4% - lower high-margin aftermarket sales; temporary mix headwind in OE; higher production costs to support OE ramp-up

Operating profit: decline primarily as a result of lower gross profit; modestly higher C&A cost and R&D investment

Continued strong revenue growth, temporary margin headwinds

*Restated to show In-Service Support Solutions (ISS) revenue as services


45

76% 12%

12%

88%

12%

Defence 10%

Services/MRO 3%

Civil 35%

OE 40%

Services (32)%

ITP Aero OE revenue up 40%

Growth in Trent and P&W programmes

Services revenue decline Lower spare parts consumption - expected to increase in H2

Margin headwinds, largely due to phasing Operating margins affected by lower levels of high-margin spares sales (expected to improve in H2); temporary OE mix headwinds, and production ramp-up costs

Outlook Around 10% revenue growth, margins stable vs FY18

Growth in Civil OE and installed fleet

Underlying revenue

£457million

By type

By end market



FY19 guidance 03


47

Key drivers of our H2 FCF improvement

Higher profits and significant working capital unwind will drive cash performance

H1 2019 core FCF: £(391)m

Higher underlying profit led by Power Systems; improvement in ITP Aero; Civil Aerospace close to breakeven

Unwind of high H1 inventory levels in Civil Aerospace & Power Systems

Continued growth of engine flying hours ahead of sales in Civil Aerospace (LTSA creditor inflow)

FY 2019 core FCF: £700m +/- £100m

£(391)m

H1 2019 core FCF

£700m +/- £100m

FY 2019 core FCF

~£500m

>£500m

>£100m

H2 Contribution


48

2019 Outlook

£m 2018 Core 2019 Outlook

Underlying revenue

Civil Aerospace 7,378 Around 10% growth

Power Systems 3,484 Mid single-digit growth

Defence 3,124 Stable

ITP Aero 779 Around 10% growth

Core underlying revenue 14,336

Underlying operating profit

Civil (162) Closer to breakeven

Power Systems 317 Margins around 100bps higher

Defence 427 Margins around 100bps lower

ITP Aero 67 Margins stable

Core underlying operating profit 633 £700m +/- £100m

Core free cash flow 641 £700m +/- £100m

A further step towards at least £1bn of FCF in 2020

FY 2019 guidance confirmed


49

Warren East Chief Executive

Business outlook


50

Market environments

Power systems Defence

Power generation – mission critical / microgrid enables renewable technologies

Markets – hybrid power / changing emissions standards

Geographical expansion – under penetration in China and India

US DoD – modest long-term growth in defence budget

UK MoD – stable environment with continuing MoD cost focus

Export – regional tensions driving pockets of growth e.g. SE Asia

ITP Aero – supported by sustained growth in both widebody and narrowbody fleets

Engine Published build rate (airframe per month)

Trent 1000 14

Trent 7000 4.5

Trent XWB 10

Trent 900 0.5

c. 500 Our deliveries p.a.

6,500 Our installed base

Civil Aerospace

Widebody civil engine deliveries moving to long-term trend

Business aviation current build rates expected to continue; Pearl family of engines


51

Build balanced portfolio

Pioneering the Power that Matters

Rolls-Royce pioneers cutting edge technologies that deliver clean, safe and competitive solutions to meet our planet’s vital power needs

Champion electrification

Transform our Business

Reinvent with digital Vitalise existing capabilities

Creating the leading industrial technology company

Develop: Our long-term vision and strategy


The ‘power that matters’ is increasingly lower carbon

52

Two-thirds of R&D

New technologies

Data itself

Real products today

Bolt-on acquisition

E-Fan X and regional opportunities

Three demonstrators

Microgrids Stimulates renewables

Alternative energy storage

Small Modular Reactors Non-carbon base load

Export opportunities

Few companies are better placed than us to be part of the solution

Playing our part in delivering lower carbon power

Vitalising existing capabilities

Championing electrification


People & culture

Customers

Technology

Financial progress

Revitalise service

Develop new engine architecture

Advance electrification projects

Build a resilient business

Continue restructuring programme

Further simplify processes

Diversity & belonging

Continue improving free cash flow

Further strengthen balance sheet

Continued capital allocation discipline

Increase production volume

Expand service network

Mitigate disruption from in-service issues

Building on progress for FY 2019


54

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 respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing to the Company, anticipated cost savings or synergies and the completion of the Company's strategic transactions, are forward-looking statements. By their nature, these statements and forecasts involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The forward-looking statements reflect the knowledge and information available at the date of preparation of this announcement, and will not be updated during the year. Nothing in this announcement should be construed as a profit forecast. All figures are on an underlying basis unless otherwise stated - see note 2 of the Financial Review section of the 2019 Half Year Results Statement for the definition.

2019 - rolls-royce holdings/media/files/r/rolls-royce/documents/... · h1 18 reduced oe cash...

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