The Covid-19 pandemic hit the engineering company's core business. Getty Images
The Covid-19 pandemic hit the engineering company's core business. Getty Images
The Covid-19 pandemic hit the engineering company's core business. Getty Images
The Covid-19 pandemic hit the engineering company's core business. Getty Images

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Business

Rolls-Royce recovery on track as global travel revives

Pandemic's impact on engineering company resulted in steep losses in core business

Damien McElroy
Damien McElroy

August 04, 2022

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Rolls-Royce announced a loss for the first half of the financial year as it manages rising inflation and supply chain disruption for its engineering and aircraft engine business.

The loss of £1.6 billion ($1.94bn) came as the management said the squeezed operating profit margin would improve in the second half, keeping it on track to meet its targets in tough conditions.

“The external environment remains challenging, with the war in Ukraine, inflationary pressures and supply chain constraints all impacting our business,” the company said.

“We expect these issues will persist into 2023 and have been managing our business to address and minimise the impact.”

The engine maker reported lower underlying operating profit of £125 million in the first half of the year on underlying revenue of £5.3bn, compared with £307m a year ago.

The Covid-19 pandemic hit the engineering company's core business, which revolves around engine flying hours. No flying hours means no revenue.

The company lost £4bn in 2020. Flying hours for wide-body turbines, a key metric for highly profitable overhaul activity, have reached 60 per cent of pre-coronavirus levels, helping to trim cash outflows by £1.1bn.

A Rolls-Royce Trent XWB engine, designed specifically for the Airbus A350 family of aircraft, at the company's factory in Derby. Reuters Photo: Rolls-Royce
A Rolls-Royce Trent XWB engine, designed specifically for the Airbus A350 family of aircraft, at the company's factory in Derby. Reuters Photo: Rolls-Royce

“We have progressed well in the first half of the year,” chief executive Warren East said. “We are actively managing the impacts of a number of challenges, including rising inflation and ongoing supply chain disruption, with a sharper focus on pricing, productivity and costs.”

Rolls-Royce repeated its full-year financial targets of low to mid-single digit underlying revenue growth, an unchanged operating margin and modestly positive free cash flow this year, weighted towards the second half.

The British manufacturer is the sole engine supplier for the Airbus A350 and has a sizeable market share on other flagship models such as the A380 and the Boeing 787.

As part of its slimming down process, it turned three assembly lines into one and moved production in Singapore back to Derby, where six or seven engines a week are prepared for passenger aircraft.

The company makes about a quarter of its materials in-house, such as ultra-strong turbine blades ready to withstand 12,000 revolutions a minute, and made in an increasingly automated process with robots doing the heavy lifting.

For the parts it cannot make itself, Rolls-Royce has narrowed down its suppliers to a small group of what it regards as high-quality providers and signed long-term deals for the next decade.

Shares of the London-based firm fell as much as 6.8 per cent in early trading, extending their decline this year to 30 per cent.

'Spirit of Innovation' – in pictures

  • Rolls-Royce's 'Spirit of Innovation' took to the air last week powered by a 400kw battery and easily slipped past 200mph (321kpm), marginally short of the current world speed record of 213mph (342kmh). All Photos: Mark Chilvers / The National
    Rolls-Royce's 'Spirit of Innovation' took to the air last week powered by a 400kw battery and easily slipped past 200mph (321kpm), marginally short of the current world speed record of 213mph (342kmh). All Photos: Mark Chilvers / The National
  • Phill O’Dell, chief test pilot (L) and Matheu Parr, Rolls-Royce’s project leader for Accelerating the Electrification of Flight, pose with the 'Spirit of Innovation'.
    Phill O’Dell, chief test pilot (L) and Matheu Parr, Rolls-Royce’s project leader for Accelerating the Electrification of Flight, pose with the 'Spirit of Innovation'.
  • The aircraft can fly 200 nautical miles – 370km or from London to Paris – on a single charge that takes only 30 minutes for the lithium-ion batteries to power fully.
    The aircraft can fly 200 nautical miles – 370km or from London to Paris – on a single charge that takes only 30 minutes for the lithium-ion batteries to power fully.
  • 'She is monstrously powerful,' said Mr O’Dell.
    'She is monstrously powerful,' said Mr O’Dell.
  • The £6 million ($8.2m) project is 50 per cent funded by the British government, which very much has its eye on innovating air travel.
    The £6 million ($8.2m) project is 50 per cent funded by the British government, which very much has its eye on innovating air travel.
  • 'This proves electrification is here to stay and we would very much like our children to see electrification,' said Matheu Parr.
    'This proves electrification is here to stay and we would very much like our children to see electrification,' said Matheu Parr.
  • The plane’s sleek lines and heavy nose suggest power and Rolls-Royce admits its sole purpose is to be “built for speed”, capable as it is of 500 horsepower.
    The plane’s sleek lines and heavy nose suggest power and Rolls-Royce admits its sole purpose is to be “built for speed”, capable as it is of 500 horsepower.
  • In a few weeks Phill O’Dell hopes to become the first person to fly a battery-powered aircraft at more than 300mph (482kph).
    In a few weeks Phill O’Dell hopes to become the first person to fly a battery-powered aircraft at more than 300mph (482kph).
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Day 3, Abu Dhabi Test: At a glance

Moment of the day Just three balls remained in an exhausting day for Sri Lanka’s bowlers when they were afforded some belated cheer. Nuwan Pradeep, unrewarded in 15 overs to that point, let slip a seemingly innocuous delivery down the legside. Babar Azam feathered it behind, and Niroshan Dickwella dived to make a fine catch.

Stat of the day - 2.56 Shan Masood and Sami Aslam are the 16th opening partnership Pakistan have had in Tests in the past five years. That turnover at the top of the order – a new pair every 2.56 Test matches on average – is by far the fastest rate among the leading Test sides. Masood and Aslam put on 114 in their first alliance in Abu Dhabi.

The verdict Even by the normal standards of Test cricket in the UAE, this has been slow going. Pakistan’s run-rate of 2.38 per over is the lowest they have managed in a Test match in this country. With just 14 wickets having fallen in three days so far, it is difficult to see 26 dropping to bring about a result over the next two.

The biog

Prefers vegetables and fish to meat and would choose salad over pizza

Walks daily as part of regular exercise routine 

France is her favourite country to visit

Has written books and manuals on women’s education, first aid and health for the family

Family: Husband, three sons and a daughter

Fathiya Nadhari's instructions to her children was to give back to the country

The children worked as young volunteers in social, education and health campaigns

Her motto is to never stop working for the country

'Panga'

Directed by Ashwiny Iyer Tiwari

Starring Kangana Ranaut, Richa Chadha, Jassie Gill, Yagya Bhasin, Neena Gupta

Rating: 3.5/5

The specs: 2018 Nissan Patrol Nismo

Price: base / as tested: Dh382,000

Engine: 5.6-litre V8

Gearbox: Seven-speed automatic

Power: 428hp @ 5,800rpm

Torque: 560Nm @ 3,600rpm

Fuel economy, combined: 12.7L / 100km

Results

Catchweight 60kg: Mohammed Al Katheeri (UAE) beat Mostafa El Hamy (EGY) TKO round 3

Light Heavyweight: Ibrahim El Sawi (EGY) no contest Kevin Oumar (COM) Unintentional knee by Oumer

Catchweight 73kg:  Yazid Chouchane (ALG) beat Ahmad Al Boussairy (KUW) Unanimous decision

Featherweight: Faris Khaleel Asha (JOR) beat Yousef Al Housani (UAE) TKO in round 2 through foot injury

Welterweight: Omar Hussein (JOR) beat Yassin Najid (MAR); Split decision

Middleweight: Yousri Belgaroui (TUN) beat Sallah Eddine Dekhissi (MAR); Round-1 TKO

Lightweight: Abdullah Mohammed Ali Musalim (UAE) beat Medhat Hussein (EGY); Triangle choke submission

Welterweight: Abdulla Al Bousheiri (KUW) beat Sofiane Oudina (ALG); Triangle choke Round-1

Lightweight: Mohammad Yahya (UAE) beat Saleem Al Bakri (JOR); Unanimous decision

Bantamweight: Ali Taleb (IRQ) beat Nawras Abzakh (JOR); TKO round-2

Catchweight 63kg: Rany Saadeh (PAL) beat Abdel Ali Hariri (MAR); Unanimous decision

Safety 'top priority' for rival hyperloop company

The chief operating officer of Hyperloop Transportation Technologies, Andres de Leon, said his company's hyperloop technology is “ready” and safe.

He said the company prioritised safety throughout its development and, last year, Munich Re, one of the world's largest reinsurance companies, announced it was ready to insure their technology.

“Our levitation, propulsion, and vacuum technology have all been developed [...] over several decades and have been deployed and tested at full scale,” he said in a statement to The National.

“Only once the system has been certified and approved will it move people,” he said.

HyperloopTT has begun designing and engineering processes for its Abu Dhabi projects and hopes to break ground soon. 

With no delivery date yet announced, Mr de Leon said timelines had to be considered carefully, as government approval, permits, and regulations could create necessary delays.

MATCH INFO

Manchester City 0

Wolves 2 (Traore 80', 90 4')

More on Quran memorisation:
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Third Test

Day 3, stumps

India 443-7 (d) & 54-5 (27 ov)
Australia 151

India lead by 346 runs with 5 wickets remaining

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The President's Cake

Director: Hasan Hadi

Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem 

Rating: 4/5

States of Passion by Nihad Sirees,
Pushkin Press

While you're here
Killing of Qassem Suleimani
Company Profile

Name: Thndr
Started: 2019
Co-founders: Ahmad Hammouda and Seif Amr
Sector: FinTech
Headquarters: Egypt
UAE base: Hub71, Abu Dhabi
Current number of staff: More than 150
Funds raised: $22 million

Tips%20for%20travelling%20while%20needing%20dialysis
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Updated: August 04, 2022, 8:52 AM