UK-based global major power and propulsion systems group Rolls-Royce released its results for 2022 on Thursday. It reported that last year it had recorded improvements in its orders, revenue, profit and cash flow. It also reduced its net debt.

The group reported underlying revenues for last year of £12.691-billion (as against £10.947-billion in 2021) and statutory revenues of £13.520-billion (2021: £11.218-billion). Underlying operating profit in 2022 came to £0.652-billion (2021: £0.414-billion) while statutory operating profit was £0.837-billion (2021: £0.513-billion). The underlying profit before taxation amounted to £0.206-billion last year (2021: £0.036-billion). However, regarding the statutory profit before taxation figure for 2022, that was actually a loss, of £1.502-billion, and this represented a significant deterioration over the statutory loss of £0.294-billion recorded in 2021. Underlying cash flow last year came to £0.505-billion, a great improvement over the equivalent figure for 2021, which was negative £1.485-billion. Net debt was cut to £3.251-billion in 2022, from £5.157-billion in 2021.

The group’s Civil Aerospace and Defence businesses won strong new orders last year, while Power Systems’ order book reached a record level. Regarding Civil Aerospace, large engine flying hours increased by 35% in 2022, compared with 2021. And major new engine orders were secured, from Malaysia Aviation Group, Norse Atlantic Airways, and Qantas. Long-term service agreement (LTSA) contract invoiced flying hour receipts rose and LTSA margins improved. In the Defence business, a notable event was the selection, by the US Army, of the Bell V-280 Valor tiltrotor aircraft as its Future Long-Range Assault Aircraft; the V-280 was powered by Rolls-Royce AE1107F engines. And the Power Systems business increased its order intake by 29%, reaching a total of £4.3-billion.

“While our performance improved in 2022, we are capable of much more,” highlighted new Rolls-Royce CEO Tufan Erginbilgic. “Our transformation programme will improve our efficiency and commercial outcomes, and deliver a sustainable reduction in working capital. This will require a winning culture, underpinned by more effective performance management and a shared determination to deliver cash and reduce debt. Our success will enable us to reward investors for their support and invest in future growth.”

This transformation programme was divided into seven workstreams. In the order given by Rolls-Royce, these were – efficiency and simplification (to deliver “sustainable cost efficiencies”); commercial optimisation (balancing risk with reward and value-creation for customers); working capital (structurally and significantly reducing this across the group); business improvement (each business unit developing and implementing plans to eliminate performance gaps and so fully realise its potential); strategic review (to allow the prioritisation of the group’s investment opportunities); performance management (ensuring that all businesses and employees achieved high performance); and, purpose and culture (to achieve a mindset in all Rolls-Royce staff that ensured that they were confident, timely and proactive).

“Our transformation programme is already underway and is moving at pace,” he reported. “It will include a strategic review so that we can prioritise our investment towards the most profitable opportunities. We will report the findings together with our medium-term goals in the second half of this year.”

The group also issued its underlying financial guidance for this year. This was for an operating profit of from £0.8-billion to £1.0-billion and for a free cash flow of from £0.6-billion to £0.8-billion.