Rolls-Royce held annual guidance as the rebound in post-pandemic air travel continued and said recent market turmoil and inflation had not impacted cash flow.
The company, which gets paid when its engines are airborne, said hours flown by its customers were now at 65% of 2019 pre-Covid levels.
“The recent volatility in interest rates and foreign exchange rates have not had a material impact on our underlying cash flows or full-year 2022 group guidance, which is unchanged,” Rolls said on Thursday, adding that it had also paid off £2bn in debt with proceeds from the sale of its ITP Aero unit.
“Many of our long-term contracts contain inflation-linked pricing clauses based on standard indices for energy, materials and wages that help to mitigate cost increases.”
Rolls added that it it was managing energy and raw material inflation risks through supplier agreements and hedging policies.
“In October we agreed a 6.5% wage increase and additional £1,500 payment with UK represented staff, reflecting the substantial cost of living increases our people are experiencing. We aim to recover cost inflation though operational efficiencies as well as increased pricing.”
“Supply chain pressures have led to higher levels of inventory, but we do not expect this to affect our ability to meet guidance and remain focused on delivering good cash conversion.”
Reporting by Frank Prenesti for Sharecast.com
