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


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.


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


( )

£m

Movement in Group profit


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


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


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


Revenue

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

£m

£m


• 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



H1

H2 Drivers

( ) ( )

54

(264)

(43)

1,236

983 900

1,000

1,100

1,200

1,300


Revenue

£m

£m


• 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


H1

H2 Drivers

(95)

(35)

(69) 1,017

818

700

800

900

1,000

1,100


Revenue

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

£m

£m


• 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


Revenue

2 (4) (3)

(2) 22

15

0

10

20

30

HY 2013UPBT

Volume Trading R&D Restruct. HY 2014UPBT


H2 Drivers

2013 figures restated to include Submarines, previously in Marine

£m

£m


• 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


Revenue

(4)(2)

(7)

(2)72

62

5

55

60

65

70

75

80

HY 2013UPBT



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


Debt maturities

Credit Rating

Strong liquidity

13

2014 Group guidance


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


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


16

Q&A

John Rishton Chief Executive

Mark Morris Chief Financial Officer


17

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