UK's Rolls-Royce confident on outlook despite Middle East disruption
Rolls-Royce Maintains Profit Guidance Amid Regional Challenges
(This April 30 story has been refiled to change the picture, with no changes to text)
By Sarah Young
Company Performance and Market Impact
LONDON, April 30 (Reuters) - British engineering company Rolls-Royce said it was sticking to guidance for profit to rise at least 16% this year and would be able to fully mitigate the disruption caused to its airline customers by the Iran war.
Rolls-Royce provides engines that power Airbus A350 and Boeing 787 widebody jets. Airlines were hit by severe disruption to global air travel in the first few weeks of the Iran war, which began in late February.
Airline Industry Response
Air travel has since recovered somewhat, although airlines, which pay Rolls for the hours they fly using its engines, continue to face higher fuel prices as a result of the conflict, and some have cancelled flights and warned of jet fuel shortages.
Rolls-Royce Recovery and Mitigation Measures
Rolls said in a trading update on Thursday that it had seen a recovery in engine flying hours from Middle Eastern airlines, with some engines now back at pre-conflict levels, and there had been growth in other regions as carriers reallocate capacity.
"We expect to fully mitigate the current financial impact of the disruption to our business," chief executive Tufan Erginbilgic said in a statement.
Share Performance and Transformation Plan
Shares in Rolls were up 2% in early deals, in what Jefferies analysts called a "reassuring" update.
Stock Trends and Executive Leadership
While shares in Rolls had lost 9% over the last three months on concerns about the impact of the conflict, they are up over 600% since Erginbilgic took over as chief executive in 2023 and launched a plan to make the company more profitable.
Transformation Plan Details
Rolls said progress with that transformation plan gave it "further confidence" in its guidance, which analysts said could hint at possible upgrades later this year.
Future Outlook and Divisional Performance
For 2026, the company, whose power systems are used in data centres and which has nuclear power and defence businesses, is guiding to operating profit of between 4 billion pounds and 4.2 billion pounds ($5.39-5.66 billion).
Order Intake and Demand Drivers
Rolls said its other divisions had all had strong starts to the year with order intake across gas and diesel engines in the first quarter around 50% higher than last year, as demand from data centres soars.
($1 = 0.7427 pounds)
(Reporting by Sarah Young, editing by Paul Sandle, Alexandra Hudson)
