Rolls-Royce has swung back into profit as the return of long-distance travel and a turnaround programme kicked off by its new boss gathered pace.
The FTSE 100 engineering giant made £1.4billion in the first six months of the year – up from a loss of £1.8billion in the same period of 2022.
Rolls was boosted by the return of long-haul flying in 2023, as it makes money from servicing engines for planes such as Boeing 787s and Airbus A350s.
It makes money by charging customers for the number of hours flown.
Sales soared partly because it has hiked these prices – though chief executive Tufan Erginbilgic said it should have raised them sooner.
Back in the black: Rolls-Royce made £1.4bn in the first six months of the year – up from a loss of £1.8bn in the same period of 2022
The City was also satisfied with an overhaul launched by Erginbilgic, who became boss at the start of the year.
Erginbilgic, who joined from BP, was quick to brand it a ‘burning platform’ in January, meaning it urgently needed to clean up its act.
He said the company needed to be ‘honest about our financial underperformance’ adding that with every investment it makes, Rolls ‘destroys value’.
Erginbilgic, whose nickname is ‘Turbofan’ because of his track record of quickly turning around businesses, has cut jobs at management level and is working on a longer-term strategy which he intends to lay out in November.
The company last week said it expected to make higher profits for the full year than it had previously forecast, which sent the share price soaring.
Rolls has more than doubled in value so far this year under Erginbilgic, who replaced longtime boss Warren East.
East steered Rolls through the pandemic by slashing jobs, selling parts of the business and refinancing. The company is now worth £16.2billion.
Rolls also works in defence and is spearheading a project to design and build small nuclear power stations.
Erginbilgic said: ‘There is much more to do to deliver better performance and to transform Rolls into a high-performing, competitive, resilient and growing business.’
Michael Hewson, chief market analyst at CMC Markets, said yesterday’s announcement made Rolls seem like ‘a completely different beast’ to the company that Erginbilgic described as a ‘burning platform’.
Shares rose 4.5 per cent, or 8.3p, to 192.2p yesterday.
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