Rolls-Royce Share Price Rallied 8.65% on Upbeat FY 2023 Results

The Rolls-Royce Holdings PLC (LON: RR) share price rallied 8.65% after its full-year 2023 results were released. The company reported an underlying operating profit of £1.6 billion and an underlying margin of 10.3%, showcasing the positive effects of our strategic measures.

The British multinational aerospace and defence company noted that its strategic initiatives had led to improved commercial optimisation and cost-saving advantages throughout the organisation.

A historic high in free cash flow was achieved at £1.3 billion, attributed to the operating profit and sustained growth in long-term service agreement (LTSA) balances. The return on capital has seen a substantial increase, more than doubling to 11.3%. This growth is due to enhanced operating profit, stringent capital allocation, and effective management of working capital.

The statutory net cash flow from operating activities reached £2.5 billion, showing a £1.0 billion increase compared to the previous year. The net debt decreased to £2.0 billion, a significant reduction from £3.3 billion at the end of 2022. This reduction underscores our commitment to bolstering the balance sheet and enhancing financial durability.

Looking ahead to 2024, the company anticipates continued growth, projecting an underlying operating profit in the range of £1.7 billion to £2.0 billion and free cash flow estimated to be between £1.7 billion and £1.9 billion.

The operating hours for large engines in the Civil Aerospace sector rebounded to 88% of the figures recorded in 2019, marking an increase from 65% in 2022. Orders for large engines reached their highest point in over 15 years, fueled by significant purchases from Air India and Turkish Airlines.

In the Defence sector, the announcement of the AUKUS submarine deal is noteworthy, and it will benefit from expanding our submarine facility in Raynesway.

Tufan Erginbilgic, Rolls-Royce CEO, 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.” 

Rolls-Royce share price. 

The Rolls-Royce share price rallied 8.65% to trade at 357.90p from Wednesday’s closing price of 329.40p.