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Rolls-Royce stock jumped 25% on Thursday: here’s the catalyst

Rolls-Royce reports a 57% YoY increase in its full-year underlying profit.

The multinational improved its free cash flow by a whopping £2.0 billion.

Rolls-Royce stock is currently up more than 30% versus the start of 2023.

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Rolls-Royce Holdings PLC (LON: RR), on Thursday, reported a 57% annualised growth in its full-year underlying profit. Shares are up nearly 25% today.

What drove strength for Rolls-Royce in 2022?

The British multinational said it generated £652 million ($786 million) of underlying profit in 2022 – well ahead of £478 million that experts had forecast.

Rolls-Royce attributed the full-year strength to demand for international travel that particularly helped its civil aerospace business. In the prior year, that segment was under pressure due to the COVID restrictions.

The London-headquartered firm reiterated its commitment to winning investment grade credit rating again and resuming dividend payments. It, however, refrained from divulging a timeline for that. Versus the start of the year, Rolls-Royce stock is up more than 30% at writing.

Why else is Rolls-Royce stock up today?

Rolls-Royce had £505 million in full-year free cash flow from continuing operations – about £2.0 billion more than 2021. Its revenue climbed just over 20% to £13.52 billion as well.

For the current year, the aerospace and defense company is calling for up to £1.0 billion of operating profit on £600 million to £800 million in free cash flow. In the earnings press release, CEO Tufan Erginbilgic said:

While our performance improved in 2022, we’re capable of much more. Our transformation programme will improve efficiency and commercial outcomes and deliver a sustainable reduction in working capital.

He also confirmed that the transformation programme is moving at pace. Wall Street currently has a consensus “hold” rating on the Roll-Royce stock.




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