RYCEY Rolls Royce Holdings PLC (PK)

By Anthony O. Goriainoff

Rolls-Royce Holdings PLC said Thursday that its Civil Aerospace business has experienced a significant fall in demand due to the coronavirus pandemic during the first half, and that it saw a low double-digit decline in Power Systems revenue.

The U.K. jet-engine maker said that it expects its performance to improve in the second half, with free cash outflow of around 4 billion pounds ($5.04 billion).

The company said it has made good progress on Trent 1000 fixes, and that its widebody engine flying hours were down approximately 75% in the second quarter and 50% for the first half.

Rolls-Royce said that its Defense business has remained resilient, with continued demand from key government customers, and that its GBP1.0 billion cost mitigation actions for 2020 are on track, having achieved around GBP300 million in the first half.

The company added that its restructuring is underway, supporting free cash flow recovery to at least GBP750 million in 2022.

Rolls-Royce said it anticipates a gradual recovery of its end markets as travel restrictions ease in the coming months, while acknowledging the elevated level of uncertainty in the industry outlook.

"We currently forecast widebody engine flying hours to be down in the region of 55% this year, with more long-haul routes opening up in the fourth quarter. We continue to plan for about 250 widebody engine deliveries in 2020, based on announced build rates from our airframer customers," the company said.

The company didn't give any further information on its financing options. On Friday, the company said it was considering a range of potential options to strengthen its balance sheet to position itself in the post-pandemic recovery period. Rolls-Royce added that its current financial position and liquidity remain strong.

The company previously said it plans to cut 9,000 roles, out of a global workforce of 52,000, as part of its major restructuring.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com

(END) Dow Jones Newswires

July 09, 2020 02:57 ET (06:57 GMT)

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