Rolls-Royce Warns of Further Hit From Trent 1000 Issues
November 07 2019 - 2:10AM
Dow Jones News
By Adria Calatayud
Rolls-Royce Holdings PLC (RR.LN) on Thursday warned of a further
earnings and cash-flow hit on the back of issues in its troubled
Trent 1000 engines, as the company expects to book a charge of 1.4
billion pounds ($1.80 billion).
The British aircraft-engine maker said it now expects full-year
operating profit and free cash-flow to be toward the lower end of
its guidance ranges as a result of higher costs in fixing Trent
1000 engines used on Boeing Co.'s (BA) 787 Dreamliner planes.
The company estimates in-service cash costs over the Trent 1000
issues will amount to GBP2.4 billion across the 2017-23 period.
This includes GBP1.6 billion previously expected, a fresh GBP400
million hit and a further GBP400 million in costs previously
included within the company's normal program contingency,
Rolls-Royce said.
Separately, Rolls-Royce will book an exceptional charge to
operating profit of GBP1.4 billion in 2019, it said. This reflects
additional cash costs associated with customer disruption and
remediation as well as recognition of future contract losses, the
company said.
Rolls-Royce said it is taking further action, including
accelerated investments in additional maintenance capacity and
spare engines, to reduce disruption.
The company said it expects to deliver a free cash flow of at
least GBP1 billion in 2020 and that it is confident in its midterm
ambition of a free cash-flow of GBP1 a share as Trent 1000 costs
subside.
"My top priority is improving customer confidence in the Trent
1000," Chief Executive Warren East said.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
November 07, 2019 02:55 ET (07:55 GMT)
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