Supply Chain Woes, Inflation Hit Rolls-Royce Profits In H1
British engine manufacturer Rolls-Royce has posted a half-year pre-tax loss of £111 million ($134.9 million) which it attributed to challenges including the strained global aviation supply chain and rising cost inflation.
In results released on Thursday (Aug. 4), the Derby-headquartered company reported an underlying operating profit of £125 million for the first six months of this year, a reduction of £307 million compared to the same period last year.
Underlying revenues for the six months to Jun. 30, 2022 stand at £5.3 billion, slightly higher than the £5.2 billion posted in H1 2021.
Rolls-Royce stated that compared to before the pandemic, widebody engine flying hours remain down by 40%, which has led to reduced demand in engine overhaul activity.
Aftermarket services, which contribute to more than 50% of the company's overall revenues, increased by 22% in the first half of 2022 for widebody aircraft and 6% for overall shop visits.
The company noted challenges across the business related to strained global supply chain and cost inflation, which it is actively looking to navigate through a sharper focus on pricing, productivity, and costs.
Despite these challenges, the engine giant noted an upturn in widebody engine demand and says it expects “low- to mid-single-digit revenue growth” in 2022.
Rolls-Royce says this expectation is based on improvements in civil aerospace performance driven by higher large engine sales and increases in engine shop visits.