Rolls-Royce Holdings PLC (LSE:RR.) returned to profit in 2021 as it hit restructuring targets a year ahead of schedule and announced its chief executive will step down.
Looking ahead, the engine maker expects low-to-mid-single digit revenue growth and operating profit margin to be broadly unchanged and anticipates growth in its end markets as the impact of the coronavirus (COVID-19) pandemic eases.
Operating profit for 2021 was £513mln compared to a loss of £1.97bn in 2020, with cash burn falling 65.5%.
Revenue dropped 2% to £11.2bn, hit by reduced income in the company’s largest civil aerospace section as a result of restructuring and COVID-19.
“We have improved our financial and operational performance, continued to deliver on our commitments and created a better balanced business capable of sustainable growth,” said Warren East, chief executive of Rolls Royce.
"We expect low-to-mid-single digit revenue growth and we expect our operating profit margin to be broadly unchanged as underlying operational improvement is balanced with increased engineering spend to develop sustainable growth opportunities.
"We expect to generate modestly positive free cash flow in 2022, seasonally weighted towards the second half of the year."
Engine deliveries and repair visits both fell as flying hours for its long-term service agreement (LTSA) engines struggled to recover in 2021, but revenue growth was strong in the company’s defence and power systems segments.
The company posted earnings per share (EPS) of £1.48, an improvement on last year’s loss per share of £51.81.
Rolls Royce embarked on a redundancy programme that saw the culling of more than 9,000 workers, which the company said helped it achieve its £1.3bn run-rate savings target a year ahead of schedule.
But the company still took on extra debt, with net debt of £5.2bn in 2021, up from £1.6bn in 2020, as £1.2bn was pumped into research and development.
Rolls Royce also announced its chief executive East would step down from his role at the end of 2022, as the company tries to move on from COVID-19 turbulence.
“With the advances we have made, the momentum and energy we have shown and our firmer financial foundations, this is the right moment to look to the future. I am thoroughly committed to leading this business while we work towards a smooth leadership transition,” said East.
Rolls Royce fell almost 12% to 103.68p in early deals.