Roll with the punches

7 March 2018 By Liam Proud Follow @liamwardproud

The UK aerospace group churned out 273 mln pounds of free cash in 2017, more than twice what analysts expected. It should do even better this year. Boss Warren East has been understandably stingy with dividends after profit warnings and a bribery scandal. Expect that to change.

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Rolls-Royce on March 7 said 2017 revenue was 15.1 billion pounds in underlying terms, which includes the effects of the company’s currency hedging. That was 6 percent higher than in 2016 excluding currency moves and M&A, and almost 3 percent higher than analysts expected, according to company-supplied consensus forecasts.

The British aerospace group said underlying operating profit was 1.2 billion pounds, up 22 percent in organic terms and higher than analyst expectations of 984 million pounds.

Free cash flow was 273 million pounds in 2017, compared with 100 million pounds in the previous year and consensus forecasts of 129 million pounds.

Chief Executive Warren East said free cash flow this year would be 450 million pounds, give or take 100 million pounds. The group is targeting free cash flow of around 1 billion pounds by 2020.

Rolls-Royce shares were up 14.4 percent to 9.48 pounds by 0915 GMT on March 7.

(The end of paragraph two has been corrected to million not billion.)

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