Rolls-Royce pledged to generate £750m of free cash by 2022 even as it signalled significantly lower income from its wide-body engine business over the next seven years as a result of the coronavirus pandemic.
The aero-engine maker said in a trading statement on Thursday that it was closing out a third of its $37bn dollar denominated hedges in a sign of the expected reduction in both aero-engine sales and engine flying hours - the source of more than half the income of its civil aerospace business. The cash costs of closing the hedges would amount to £1.45bn over seven years, the group said.
Warren East, chief executive, said the virus had created a “historic shock in civil aviation which will take several years to recover”.
Engine flying hours had fallen by 75 per cent in the second quarter. For the full year, the decline was expected to be 55 per cent, and roughly 30 per cent lower than 2019 levels in 2021.
But sales of engines — on which Rolls-Royce makes losses — were likely to remain subdued, the group said.
The news prompted shares to fall 9 per cent to 262.6p by mid-morning in London trade.
While aircraft makers Boeing and Airbus have said they expect recovery to take four to five years, Rolls-Royce’s focus on large engines for widebody aircraft has put it at a disadvantage. The long haul market served by these aircraft is expected to take longer to recover and the decision on the hedges suggests demand will be substantially reduced for the best part of a decade.
Rolls-Royce also announced that it had further bolstered its access to cash with a new £2bn five-year term loan, which was backed by a guarantee from UK Export Finance. The facility had not yet been drawn, but its liquidity stood at £8bn. The cash balance was £4.2 billion at the end of June. The group was reviewing options to strengthen its balance sheet, but no decisions had yet been taken, said Mr East.
The group’s cash position has been severely hit by the collapse in global aviation as a result of the crisis. Rolls-Royce now expects to see some £4bn in cash flow out of the business this year, £3bn of which would come in the first half. That compares with a promise two years ago to deliver more than £1bn in free cash by the end of 2020.
In May, Rolls-Royce announced plans to cut 9,000 jobs from its 52,000-strong workforce. A voluntary redundancy plan in the UK had already achieved 3,000, some 2,000 of whom would leave the business this year.
The radical restructuring already under way gave the group confidence that it would return to generating positive cash and Rolls-Royce said it expected to deliver £750m within two years. It was on track to deliver £1bn in savings this year.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50LzgyMzcwYzZkLWYzOGItNDc3ZS1iMGNjLWI0NDdiMzBkNGNhONIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50LzgyMzcwYzZkLWYzOGItNDc3ZS1iMGNjLWI0NDdiMzBkNGNhOA?oc=5
2020-07-09 07:28:00Z
52780907775754
Tidak ada komentar:
Posting Komentar