Rolls-Royce Doubles Annual Profits in 2023

By Thea Felicity

Feb 22, 2024 12:35 PM EST

(Photo : Photo by Romain Maurice/Getty Images for Haute Living)
MIAMI, FLORIDA - MAY 04: Rolls Royce at Avi & Co Grand Opening And Miami Race Week Celebration With Rolls-Royce Motor Cars And Haute Living on May 04, 2023 in Miami, Florida.

Rolls-Royce announced its shares surged more than 10% on Thursday after announcing the British aerospace group's impressive financial performance in 2023. 

According to the report of CNBC, the company more than doubled its annual profits, reporting an underlying operating profit of £1.6 billion, equivalent to approximately $2 billion, in 2023, compared to £652 or $880 million in 2022.

The significant profit increase was accompanied by a record free cash flow of $1.75 billion, attributed to strong operating profit and continued growth of its long-term service agreement (LTSA) book. Moreover, the return on capital more than doubled to 11.3%, while net debt decreased to $2.7 billion from $4.4 billion in 2022.

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Behind Rolls-Royce Doubled Profit

CEO Tufan Erginbilgic attributed the outstanding performance to the company's transformation efforts, which focused on commercial optimization, cost efficiencies, and progress in strategic initiatives. 

Despite facing geopolitical uncertainty, supply chain disruptions, and inflationary pressures, Rolls-Royce remains optimistic about its growth prospects.

The group forecasts a minimum 6% growth in underlying operating profit for 2024, with expected figures ranging from $2.2 billion to $2.7 billion. Additionally, free cash flow is projected to fall between $2.2 billion and $2.5 billion.

Rolls-Royce emerged as the top performer in Britain's FTSE 100 in 2023, with its shares soaring over 200% due to a profit forecast upgrade and the announcement in November that profits could quadruple by 2027.

Jarek Pominkiewicz, equity research analyst at Quilter Cheviot, hailed Rolls-Royce's full-year results as "remarkable," noting the robust growth in its Power Systems and Defence segments, which exceeded guidance.

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