Full year guidance maintained.
Warren East, Chief Executive commented:
“We delivered further progress across the group in the first half in line with our full year expectations. We expect a significant improvement in cash in the second half as we unwind inventory built up to support customer deliveries and benefit from improved trading in both Power Systems and Civil Aerospace. In Civil Aerospace we delivered on key drivers of future cash flow with further improvement in average OE unit losses and continued aftermarket growth. Defence grew both revenue and profit and enjoyed substantial order intake. In Power Systems we also saw good revenue growth and order intake and entered the second half underpinned by a healthy backlog.
We have made good progress on resolving the Trent 1000 compressor issue, though regretfully, customer disruption remains. Progress on our restructuring programme is in line with the plan we outlined a year ago. We took significant strides in accelerating our electrification ambitions through the announced acquisition of Siemens’ eAircraft business in our drive to create cleaner, more sustainable and scalable power for the future.”
- Good revenue progress; underlying Core and Group +7%; Group reported revenue +5%
- Core free cash outflow of £(391)m; to materially improve in H2 as inventory reduces
- Delivery on services growth in Civil Aerospace +18% and Power Systems +7%
- Large engine flying hour growth +8%; OE unit loss -13%; Trent 7000 production ramp-up
- Progress on Trent 1000 in-service issues; Pack B & C aircraft on ground (AOG) below 25
- Trent 1000 in-service costs increased by a total of ~£100m across the next three years
- Restructuring on track; £134m run-rate cost savings; acceleration expected in H2
- On track for FY guidance for Core underlying operating profit and FCF of £700m +/- £100m
- Outlook: at least £1bn free cash flow in FY 2020; mid-term ambition > £1 CPS……
Continuing our successful partnership with Chinese railcar company CRRC and Sri Lanka Railways our Series 4000 MTU drive system was chosen as the power plant, bringing the total number of Sri Lanka Railways MTU powered CRRC railcars to 60. In rail we converted the Iarnród Eireann Irish Rail MOU for Hybrid Power Packs into a firm order for delivery from May 2020 and signed further letters of intent for hybrid rail solutions.