RR. Rolls-royce Holdings Plc

   By Adria Calatayud 
 

Rolls-Royce Holdings PLC (RR.LN) on Thursday warned of a further earnings and cash-flow hit on the back of issues in its troubled Trent 1000 engines, as the company expects to book a charge of 1.4 billion pounds ($1.80 billion).

The British aircraft-engine maker said it now expects full-year operating profit and free cash-flow to be toward the lower end of its guidance ranges as a result of higher costs in fixing Trent 1000 engines used on Boeing Co.'s (BA) 787 Dreamliner planes.

The company estimates in-service cash costs over the Trent 1000 issues will amount to GBP2.4 billion across the 2017-23 period. This includes GBP1.6 billion previously expected, a fresh GBP400 million hit and a further GBP400 million in costs previously included within the company's normal program contingency, Rolls-Royce said.

Separately, Rolls-Royce will book an exceptional charge to operating profit of GBP1.4 billion in 2019, it said. This reflects additional cash costs associated with customer disruption and remediation as well as recognition of future contract losses, the company said.

Rolls-Royce said it is taking further action, including accelerated investments in additional maintenance capacity and spare engines, to reduce disruption.

The company said it expects to deliver a free cash flow of at least GBP1 billion in 2020 and that it is confident in its midterm ambition of a free cash-flow of GBP1 a share as Trent 1000 costs subside.

"My top priority is improving customer confidence in the Trent 1000," Chief Executive Warren East said.

Write to Adria Calatayud at adria.calatayudvaello@dowjones.com

(END) Dow Jones Newswires

November 07, 2019 02:56 ET (07:56 GMT)

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