rolls-royce holdings plc 2014 half-year results john .../media/files/r/rolls... · profit: benefits...

Rolls-Royce Holdings plc

2014 Half-year results

John Rishton, Chief Executive

Trusted to deliver excellence

Rolls-Royce Holdings plc

2014 Half-year results

Mark Morris, Chief Financial Officer

Trusted to deliver excellence

Group highlights

* Restated to reflect the new accounting treatment for Risk & Revenue Sharing Arrangements

** 2013 H1 Order book and Net cash figures are 2013 year-end.

All figures and commentary reflects the underlying performance, unless otherwise noted.

Trusted to deliver excellence

H1 2013* H1 2014 Actual

+ / -

Constant

FX

Order book (£bn)** 71,612 70,439 (2%)

Revenue (£m) 7,320 6,836 (7%)

(4%)

Profit before tax (£m) 804 644 (20%)

(17%)

Return on sales 11.4% 9.9% (1.5pp)

Net cash (£m)** 1,939 1,177 -762

Earnings per share (p) 31.88 25.64 (20%)

Shareholder payment (p) 8.60 9.00 5%

3

Movement in Group revenue 4

(201)

(57)

226 7,320

6,836

6,600

6,800

7,000

7,200

7,400

HY 2013 OE Services FX HY2014

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( )

£m

Movement in Group profit

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48

89

30

36 32

21

804

644

600

650

700

750

800

850

HY 2013UPBT

Volume Marinecharge

R&D Othertrading

Restruct. FX HY 2014UPBT

( )

( )

( ) ( )

( )

£m

Group free cash flow

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6

(634)

(541)

(189)

644

281

7 (243)

(432)

(800)

(600)

(400)

(200)

0

200

400

600

800

1,000

1,200

UPBT D&A NWC Capex &intangibles

Other Tradingcash flow

Pensions &tax

Free cashflow

£m

Business Reviews

These figures and commentary reflects the underlying performance and constant FX, unless

otherwise noted.

7

Civil Aerospace

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8

34 (41)

(29)

(13) 450

405

4

350

400

450

500

HY 2013UPBT

Volume Trading R&D Restruct. FX HY 2014UPBT

Profit before financing

• OE: 16% higher Trents & 10% fall in

large corporate jet engine deliveries

• Services: Down 2%; T&M Revenue

down; (RB211 & AE3007); Widebody

LTSA revenue up

• Profit: OE mix, lower aftermarket, R&D,

restructuring. Trading benefits from lower

C&A and improved lifecycle costs

• OE order cover 95%

• Higher Trent & large corporate jet engine

deliveries

• Profit drivers in H2: volume, higher

LLPs, cost reduction benefits, lower

restructuring.

H1

H2 Drivers

( )

71 (38)

(37)

3,201 3,197

3,000

3,100

3,200

3,300

HY 2013 OE Services FX HY2014

Revenue

Restated to reflect the new accounting treatment for Risk & Revenue Sharing Arrangements

£m

£m

Trusted to deliver excellence

• OE: Revenue down 40% with Typhoon,

Hawk Trainer, C-130J and V-22

• Services: Revenue up 9%

• Profit: volume, mix with higher

aftermarket sales, cost reduction and

higher margins on Defence LTSAs.

• 88% OE order cover

• Higher engine deliveries, driven by

TP400, Lift System.

9 Defence Aerospace

24

7596

211

188

11

140

150

160

170

180

190

200

210

220

HY 2013UPBT

Volume Trading R&D Restruct. FX HY 2014UPBT

Profit before financing

H1

H2 Drivers

( ) ( )

54

(264)

(43)

1,236

983 900

1,000

1,100

1,200

1,300

HY 2013 OE Services FX HY2014

Revenue

£m

£m

Trusted to deliver excellence

• OE: revenue down due to lower order

intake in 2013, mainly Offshore

• Services: revenue down due to:

deferrals, lower vessel utilization and

lower upgrades

• Profit: lower volumes & £30m charge.

• 98% OE order cover

• H2 improvement from: Higher volumes,

revenue shift towards OE, mainly

Offshore;

• Cost reduction lower than expected

10 Marine

(35)

(2) (30)

(5)

110

40

2

20

40

60

80

100

120

HY 2013UPBT

Volume Trading One-off R&D Restruct. HY 2014UPBT

Profit before financing

H1

H2 Drivers

(95)

(35)

(69) 1,017

818

700

800

900

1,000

1,100

HY 2013 OE Services FX HY2014

Revenue

2013 figures restated to exclude Submarines, now part of Nuclear & Energy

£m

£m

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• OE: higher unit deliveries in Oil & Gas

and Submarines

• Services: Oil & Gas down

• Profit: down, reflecting lower services

and £10m charge.

• OE Order cover of 73%

• Revenue: higher PowerGen and

Nuclear OE sales and higher services

• Profit: benefits from higher volume,

better mix, cost reduction & non-repeat

of H1 charge.

11 Nuclear & Energy

H1

(25)

(34)

712 701

48

600

650

700

750

800

HY 2013 OE Services FX HY2014

Revenue

2 (4) (3)

(2) 22

15

0

10

20

30

HY 2013UPBT

Volume Trading R&D Restruct. HY 2014UPBT

Profit before financing

H2 Drivers

2013 figures restated to include Submarines, previously in Marine

£m

£m

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• OE: sales up 5% driven by Defence and

Naval, partially offset by lower land

power, Oil & Gas and Mining.

• Services: down 6% on lower Marine and

Land Power spares.

• Profits: down due to mix, restructuring

• OE order cover 80%

• Revenue: Higher OE units across all

markets – particularly Oil & Gas and

Mining

• Profit: Higher volumes, cost reduction

and restructuring benefits from H1

12 Power Systems

H1

41 (23)

43

1,239 1,214

1,100

1,150

1,200

1,250

1,300

HY 2013 OE Services FX HY2014

Revenue

(4)(2)

(7)

(2)72

62

5

55

60

65

70

75

80

HY 2013UPBT

Volume Trading R&D Restruct. FX HY 2014UPBT

Profit before financing

H2 Drivers

( )

£m

£m

Group financial strength

• S&P: A, stable outlook

• Moody’s: A3, stable outlook

• Maintain investment grade rating

• Total liquidity £3.15bn

• Spread to 2026

• No material refinancing 2014

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Debt maturities

Credit Rating

Strong liquidity

13

2014 Group guidance

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14

Guidance at constant FX

Revenue Flat

Profit Flat excluding £30m Marine one-off charge

Free Cash Flow Similar to 2013

CapEx Around £700m

R&D Spend around £800m

P&L charge around £780m

Tax Underlying rate around 24%

2014 segment guidance 15

At Constant FX Revenue Profit

Aerospace

Civil Aerospace +2% to +5% +8% to +12%

Defence Aerospace -15% to -20% -15% to -20%

MIPS

Marine c. -10% -15% to -25%*

Nuclear & Energy +5% to +10% +30% to +40%

Power Systems +/-2% +5% to +10%

* Prior to the impact of the £30m one-off charge

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Final thoughts

• H1 results as expected

• Continued progress on the 4Cs

• Confidence in H2, driven by:

high OE order cover

higher OE & services volumes across every business

traditionally H2 weighted services

cost reduction

• Payment to Shareholders up 5% to 9.0p

Trusted to deliver excellence

16

Q&A

John Rishton Chief Executive

Mark Morris Chief Financial Officer

Trusted to deliver excellence

17