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Rolls-Royce Holdings plc
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== Financials == === Half year performance<ref>https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/rr-plc-holdings-2023-half-year-results-press-release.pdf</ref><ref>https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/rr-plc-holdings-2023-hy-results-presentation.pdf</ref> === [[File:Screenshot 2023-08-10 at 16.13.52.png|thumb|518x518px]] {| class="wikitable" !Income Statement - (£m) !'''H1 2023''' !'''H1 2022''' !'''% change''' |- |Revenue |6950 |5308 |28% |- |Gross Profit |1515 |942 |55% |- |''Gross Margin'' |''21.8%'' |''17.7%'' |''nm'' |- |EBITDA |1162 |580 |100% |- |Operating Income / EBIT |673 |125 |382% |} Looking at the half year performance of Rolls-Royce, it is clear that there has been significant growth for the company. Revenue has grown by 28% compared with last year, while gross profit has seen a growth of 55%, due to a reduced COGS margin. The growth in revenue was predominantly driven by the Civil Aerospace, Defence and Power Systems segments. The EBITDA has doubled, while the operating income has increased by more than 5 times. These encouraging and rapid growths have been primarily driven by the growth in the revenue, with the airline industry looking to bounce back from the slow-down in economic activity as a result of COVID-19. Airlines have a greater demand for new aircraft, and so aircraft manufacturers have a new demand for civil aircraft engines such as the Trent series (Trent 1000 and Trent XWB form 100% of the market for engines used on the Airbus A330neo and A350) === 5-year historical financials === [[File:Screenshot 2023-08-10 at 16.16.02.png|thumb|402x402px]] {| class="wikitable" !Income Statement - (£m) !FY-22 !FY-21 !FY-20 !FY-19 !FY-18 |- |Revenue |13520 |11218 |11491 |16587 |15729 |- |Gross Profit |2757 |2136 |1113 |942 |1198 |- |''Gross Margin'' |''20.4%'' |''19.0%'' |''9.7%'' |''5.7%'' |''7.6%'' |- |EBITDA |1285 |996 |222 | -344 | -499 |- |Operating Income / EBIT |787 |465 | -382 | -933 | -1142 |- |Net Income | -1269 |120 | -3170 | -1315 | -2401 |} [[File:Screenshot 2023-08-10 at 16.16.57.png|thumb|404x404px]] {| class="wikitable" !'''Balance sheet - (£m)''' !'''FY-22''' !'''FY-21''' !'''FY-20''' !'''FY-19''' !'''FY-18''' |- |Total asset |29450 |28674 |29517 |32266 |31857 |- |Total liabilities |35466 |33310 |34392 |35620 |32909 |- |Net assets | -6016 | -4636 | -4875 | -3354 | -1052 |} The end of the recent year (FY-22) saw a recovery in the revenue generated. Pandemic years of -20 and -21 saw consecutive drops in the revenue as a result of reduced demand. In 2022, Rolls-Royce received new large engine orders from Malaysia Aviation Group, Norse Atlantic Airways and Qantas. The Bell V-280 Valor, powered by their AE1107F engines, was selected by the US Army for the Future Long Range Assault Aircraft programme. Order intake in the Power Systems segment grew by 29% to £4.3bn. This included mission critical backup power services for their engines. === 5-year forecasted financials === [[File:Screenshot 2023-08-10 at 16.18.47.png|thumb|468x468px]] {| class="wikitable" !Income Statement (£m) !FY-23 !FY-24 !FY-25 !FY-26 !FY-27 |- |Revenue |14430 |15338 |16269 |17625 |18690 |- |Gross Profit |2886 |3068 |3416 |3701 |4112 |- |''Gross Margin'' |20% |20% |21% |21% |22% |- |EBITDA |1314 |1396 |1659 |1833 |2187 |- |Operating Income |780 |829 |1057 |1181 |1495 |- |Net income |451 |525 |758 |877 |1124 |} [[File:Screenshot 2023-08-10 at 16.19.30.png|thumb|466x466px]] Revenue is expected to reach pre-pandemic levels by 2025, and continue growing steadily after that. The gross margin is expected to grow gradually, following a reduction in the COGS as outline in the valuation section. Net income was calculated by projecting the taxes and interest expenses. Interest expenses were taken as fractions of the total debt. They were projected to be at a slightly higher than average 3% for 2023 and 2024, before slowly dropping to 2%, reflecting the higher interest rate imposed by the Bank of England, as an attempt to kerb inflation. However, holding the expectation that this attempt is successful, interest rates should drop by 2025 (conservative estimate)<ref>[https://www.thetimes.co.uk/money-mentor/article/when-will-interest-rates-go-down-uk/#:~:text=So%20when%20will%20interest%20rates,over%20the%20next%20five%20years. https://www.thetimes.co.uk/money-mentor/article/when-will-interest-rates-go-down-uk/#:~:text=So%20when%20will%20interest%20rates,over%20the%20next%20five%20years.]</ref>. Tax projections can be seen below in the valuation section. The net income projections are in line with Capital IQ analyst projections.
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