Rolls-Royce Holdings plc confirms trading outlook unchanged
Rolls-Royce Holdings plc has provided a brief update on its trading outlook and setting out the timetable for the transition of financial reporting and guidance under the new revenue recognition standard, IFRS 15.
Reconfirming his outlook comments from the Company’s Half Year Results, Warren East, Chief Executive of Rolls-Royce, said: “We have made steady progress in the second half of the year. In Civil Aerospace, we continue to achieve our key targets for customer deliveries while managing in-service issues. Defence Aerospace and Power Systems are also performing satisfactorily, although Marine continues to be impacted by weak demand for products and services for the off-shore oil and gas market. Overall, while we have a good deal left to do in the last two months of the year, our performance for 2017, for revenue, profit and free cash, remains on track.”
Looking beyond 2017, Warren East added: “Operationally, we are making good progress ramping up production, bringing new large civil engines to market and enhancing further our aftermarket capabilities across all our businesses. The installed Trent XWB-84 fleet has now achieved over 950,000 flight hours with strong in-service performance. At the same time, we are making progress reducing unit cash costs on original equipment sales of large civil engines. While markets for our Power Systems products continue to improve, we note the ongoing weakness in offshore oil and gas markets for Marine and timing changes to new export orders for Defence Aerospace. Our transformation programme is proceeding well, providing some of the cost savings that underpin our business performance while pursuing opportunities to further simplify our business structure and processes.”
Commenting on the Company’s long-term direction, Warren East added: “I am comfortable with our strategic direction and how we are investing in the long-term. We know that the growth in electrification and digitalisation will offer substantial and wide-ranging opportunities and we are now investing accordingly. The businesses in our portfolio have different roles to play as we create new cutting-edge technologies to deliver the cleanest, safest and most competitive solutions for our planet’s vital power needs. By increasing our expertise and scale in activities where electrification is relevant today, such as Power Systems, we will be better placed to benefit where electrification is still some years away, such as for propulsion systems for Civil Aerospace. Taking the right steps today and tomorrow will enable us to realise our ambition to be the world’s leading industrial technology company.”
From 1st January 2018 Rolls-Royce will adopt IFRS 15 and will transition financial reporting to the new basis. This will involve making transition adjustments to our opening balance sheet and providing appropriate forward-looking comments reflecting the new accounting methodology. It has intended to report full year 2017 results on both the current basis and using IFRS 15 where relevant. Guidance for 2018 will only be provided using IFRS 15, linking in to changes to our budgeting and planning processes. As prior year IFRS 15 comparatives will only be available when the 2017 results are published in March 2018, it will not be possible to provide 2018 guidance until then.