Rolls-Royce Posts Huge Losses, Analysts Foresee a Long Recovery Ahead

Up-close picture of an airplane jet engine

Source: Pexels

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On Thursday, the multinational engineering company revealed its grim financial situation – in just six months, the British group reached losses of £5.4 billion ($7.1 billion) before tax. The news quickly rippled throughout the markets and sent RR/u shares tumbling by 6%.

Here’s a quick overview of the other important figures, mentioned in the report:

 

– Revenue: £5.8 billion, down 26% year-over-year.

– Net debt: £1.7 billion. Rolls-Royce has agreed on a £2 billion loan aimed at helping it weather the impact of the coronavirus.

– Adjusted operating loss: £1.67 billion versus expectations for £191.8 million. This stark contrast stems from COVID-19-related charges and adjustments to civil contracts.

– Free cash flow: £2.8 billion, meeting analyst forecasts. The company kept its previous outlook for a cash flow of £1 billion in the second half of 2020.

– Fundamental restructuring: So far, more than 4,000 civil aerospace workers have left Rolls-Royce, with 5,000 more expected to follow suit by the end of this year.

 

“We ended 2019 with good operational and financial momentum. However, the COVID-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector and flights grounded across the world. We have responded rapidly to increase our liquidity, with £6.1 billion at the end of H1 and a further £2.0 billion term loan agreed in H2, to help weather the continued uncertainty around the timing and shape of the recovery in the civil aviation sector.”

Warren East, Chief Executive

 

Last month, investors were warned that it may take 7 years for Rolls-Royce to fully recover from the consequences of the pandemic. The company currently generates revenue from engine repairs and replacement. However, it projects that airline pilots will be 45% less busy this year than in 2019, with a back-to-normal schedule expected no sooner than the end of 2022.


Upcoming reports

See the full list of upcoming earnings reports for August 31st – September 4th in the tables below.

Monday, August 31st 2020

Country of originCompany nameFiscal period
USAZoom Video Communications Inc
Second quarter of 2021

Wednesday, September 2nd 2020

Country of originCompany nameFiscal period
USAAmbarella Inc
Second quarter of 2021
United KingdomBarratt Developments PLC
Full year 2020
FrancePernod Ricard SA
Full year 2020

Thursday, September 3rd 2020

Country of originCompany nameFiscal period
FranceCapgemini SE
Half year 2020

Friday, September 4th 2020

Country of originCompany nameFiscal period
USABroadcom Inc
Third quarter of 2020

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