Rolls-Royce, the British engine-maker, has witnessed a significant surge in profits, reaching £1.6 billion in underlying operating profit for 2023, up from £652 million in 2022. This impressive performance has been attributed to effective cost-cutting measures and better-than-expected revenues, which saw a 22% increase to £16.5 billion. The company has already made progress on its cost-saving targets, achieving £150 million of its £400 million to £500 million savings goal. As part of its cost-cutting plans, Rolls-Royce is set to eliminate up to 2,500 jobs by the end of next year.
“Our actions to deliver sustainable cost efficiencies and improve competitiveness are well under way,” The group said
Looking ahead, Rolls-Royce anticipates further growth, forecasting underlying earnings to rise to between £1.7 billion and £2 billion in the coming year. However, the company remains cautious due to ongoing supply chain challenges, geopolitical uncertainty, and inflationary pressures.
Despite these challenges, Rolls-Royce has seen positive indicators in its business, with engine flying hours recovering to 88% of pre-pandemic levels and large engine orders reaching their highest point since 2007. The company aims to streamline its operations by reducing duplication and leveraging its scale, including the creation of a new procurement division to cut costs by £1 billion.
Chief Executive Tufan Erginbilgic said “Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives.
“This step-change has been achieved across all our divisions despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures.”
“We are managing the business differently and our significant performance improvement in the year reflects the hard work and focused actions of all our teams. We are also continuing to invest to drive future sustainable growth. Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our mid-term targets. We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce.”
Overall, Rolls-Royce’s strong performance in 2023 sets a solid foundation for future growth and resilience, reflecting the company’s determination to unlock its full potential and remain competitive in a challenging environment.