Supply chain disruptions remain the “key operational challenge” at Rolls-Royce Holdings Plc as the U.K. maker of aircraft engines echoes comments from manufacturers like Airbus SE and Boeing Co. that have struggled to ramp up output from the pandemic-induced slump.
The maker of the engines for the Airbus A350 wide-body aircraft reiterated its full-year projections for underlying operating profit of £800 million ($1 billion) to £1 billion and free cash flow of £600 million to £800 million. Free cash flow generation will be weighted toward the second half of the year, Rolls-Royce said in a regulatory filing ahead of its annual general meeting on May 11.
Rolls-Royce fell as much as 6.85% to 145.6 pence in London May 11, clipping 2023’s advance to about 57%. The stock is the second-best performer on the FTSE 100 Index this year.
Chief executive officer Tufan Erginbilgic has initiated a transformation program at the biggest U.K. manufacturer, including some key management changes. The global aviation industry is struggling with output amid a lack of spare parts and skilled labor, coupled with disruptions brought by sanctions against Russia, which supplies components like titanium for aircraft engines.
While Rolls-Royce doesn’t expect disruption to impact its financial forecast for 2023, the company’s debt was “still too high” and the company was “proceeding with a sense of urgency,” Erginbilgic said at the AGM.
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