The British industrial company does not only want to earn money with aviation.
(Photo: imago images/imagebroker)
London Rolls-Royce shares soared more than 20 percent on Thursday after the new boss of the ailing British engine maker announced a strategic fresh start for the company. “We’re focused on commercial optimization,” said CEO Tufan Erginbilgic, who took over from Warren East earlier this year.
The focus is on civil aerospace and energy systems. Erginbilgic intends to announce details of the realignment in the second half of the year.
The 62-year-old top manager has already promised better results for the current financial year. Last year, Rolls-Royce generated adjusted operating profit of £652 million (almost EUR 740 million). An increase of 57 percent on a comparable basis compared to the previous year. Analysts had expected a profit of £489m. Sales rose slightly from £11 billion to £12.7 billion.
In the current year, the operating profit should continue to grow and be between 800 and 1 billion pounds. Erginbilgic also promised shareholders a dividend again. For the past financial year, however, the shareholders are left empty-handed.
Rolls-Royce is currently based on three pillars: the engine business for civil aviation, the defense division and energy systems. The slump in air traffic during the pandemic had given the company a hard time. A few weeks ago, Erginbilgic, who has both a British and a Turkish passport and has worked for the oil company BP for more than 20 years, described the company’s current lineup as a “burning platform.”
The 117-year-old group is lagging behind the competition and lacks strategic clarity. “We have to change because Rolls-Royce’s problems are not caused by Covid,” said Erginbilgic. Covid only exacerbated them.
Mini reactors for the energy transition
The CEO now wants to lend a hand in several areas: Erginbilgic wants to reduce capital expenditure, increase efficiency, reduce costs and leverage synergies. But the Rolls-Royce boss does not want to rule out job cuts either. Its predecessor East had already cut 9,000 jobs. Debt reduction is also one of his pressing tasks: at the end of the year the company’s debt stood at £3.25 billion.
The manager wants to give the traditional company a new structure.
(Photo: via REUTERS)
In addition to building engines, for example for Airbus and Boeing long-haul aircraft, Erginbilgic also wants to earn money from the energy transition.
The company wants to grow with nuclear power in particular: Rolls-Royce has developed small nuclear reactors that can be used to generate electricity. So far, however, there has been a lack of backing from the British government, Erginbilgic complained. Because approval of the new reactors is still pending. In total, Rolls-Royce is planning 30 such mini nuclear power plants in Great Britain.
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