Rolls-Royce reveals £2.9bn losses

Rolls-Royce has revealed pre-tax losses of £2.9bn but believes its “decisive actions” mean it has made strong progress in turning the business around.

It has been exposed to the impact of the global pandemic, with its civil aerospace division particularly badly affected.

The group’s revenues fell by £4.8bn, to £11.8bn, forcing the business to undergo a “fundamental restructuring”.

7,000 roles were removed last year as part of a £1bn cost-cutting programme.

It sought to protect its financial position with £7.3bn of new debt and equity and launched a programme to raise at least £2bn from disposals.

Rolls-Royce chief executive Warren East said: “We took immediate actions to address our cost base, launching the largest restructuring in our recent history, consolidating our global manufacturing footprint and delivering significant cost reduction measures.

“We have taken decisive actions to enhance our financial resilience and permanently improve our operational efficiency, resulting in a regrettable, but unfortunately very necessary, reduction in the size of our workforce.”

The group’s fortunes went into a tailspin as it lost £8m-per-day throughout the “unprecedented year”.

Investors took fright and its share price, which was trading above 230p before the pandemic hit the markets in February 2020, lost 85% of its value in just seven months.

Its shares have since staged a partial recovery, and closed last night at 113p, valuing the group at £9.5bn.

East is optimistic that Rolls-Royce has the right support in place for the short-term while it progresses more longer-term opportunities.

He said: “With the support of our stakeholders we successfully secured additional liquidity with a rights issue, bond issuance and further credit facilities put in place during the year. We have made a good start on our programme of disposals and will continue with this in 2021.

“We continue to invest in developing market-leading technology and low carbon opportunities in all our end markets, to create value for our stakeholders and ensure we are well positioned to take advantage of the transition to a lower carbon economy and growing demand for more sustainable power solutions.”

Matheu Parr, Rolls-Royce

Matheu Parr from Rolls-Royce is among the speakers at TheBusinessDesk.com’s Invest Midlands virtual conference in May, which has been launched this week. Find out more and book your ticket at investmidlands.uk