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Rolls-Royce on track, forecasts cash improvement

Rolls-Royce on track, forecasts cash improvement
FILE PHOTO: The logo of Rolls Royce is pictured on an engine of an Airbus A330-800 aircraft after a flight event presentation in Colomiers near Toulouse, France, November 6, 2018. REUTERS/Regis Duvignau -
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REGIS DUVIGNAU(Reuters)
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LONDON (Reuters) – Britain’s Rolls-Royce said it expected a significant improvement in cash generation in its second half driven by better trading in power systems and civil aerospace after it recorded a first-half cash outflow of 429 million pounds.

The aero-engine maker said on Tuesday it had made good progress on fixing problems with its Trent 1000 engines, although customer disruption remained.

The company, which is being restructured by Chief Executive Warren East, has forecast core underlying profit and free cash flow of 700 million pounds, plus or minus 100 million pounds, for the year, and at least 1 billion pounds in free cash flow in 2020.

Rolls-Royce makes an initial loss on the delivery of its civil aerospace engines, which power aircraft such as the Airbus A350 and A330neo, and aims to make a profit in the longer-term by including maintenance contracts.

It delivered 257 large civil aerospace engines in the half, it said, and said it made good progress in reducing average large engine unit losses, down by 200,000 pounds to 1.3 million pounds.

First-half revenue rose 7% to 7.35 billion pounds and operating profit rose 32% to 203 million pounds, the company said.

(Reporting by Paul Sandle; editing by Kate Holton)

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