Rolls-Royce Holdings PLC (LSE:RR.) maintained its guidance for 2022 despite supply chain issues, rising energy and raw material costs and the recent turmoil in the financial markets.
Chief executive Warren East said: “Supply chain pressures have led to higher levels of inventory, but we do not expect this to affect our ability to meet guidance and remain focused on delivering good cash conversion.”
In a trading update to the end of October, the British engineering company, whose engines power the Airbus A350 and Boeing 787, said it is aiming for low-to-mid-single digit underlying revenue growth, a profit margin broadly in line with last year and modestly positive cash flow.
In Civil Aerospace, large engine flying hours continued to recover and were 65% of 2019 levels in the four months to the end of October, the company said.
The 36% growth in the year to date compared to the prior year reflects uneven recovery around the world, with stronger recovery in the US and Europe but lower travel in China and Asia due to ongoing Covid measures.
In Defence, the group reported continued robust demand from customers with US$1.8bn in contract renewals and repricing relating to the next five years, to support engines in service, including those with the US Department of Defense (DoD) powering the C-130J.
Rolls-Royce forecast a low double-digit percentage operating margin in Defence in 2022.
In Power Systems, the continued high levels of demand in many end-markets is driving an exceptionally strong order book, with a record order intake year to date in 2022 and good revenue cover for 2023 and beyond, the group reported.
Rolls-Royce said that it aims to recover cost inflation through operational efficiencies and increased pricing.