Rolls-Royce targets a step change in mid-term performance

London, 28 November 2023, (Oilandgaspress) – Rolls-Royce is today holding a Capital Markets Day in which we are setting mid-term financial targets that will represent a step change in our financial performance.

Mid-term targets

We aim to make Rolls-Royce financially stronger and more resilient than it has been before. In the mid-term this means achieving:

Operating profit of £2.5bn-£2.8bn,
Operating margin of 13-15% with
Free Cash Flow of £2.8bn-£3.1bn and
Return on capital of 16-18%.
We have also set divisional mid-term targets for operating margin:

Civil Aerospace has the biggest step change, improving from 2.5% in 2022 to 15-17%.
In Defence we plan to improve from 11.8% in 2022 to 14-16%.
In Power Systems, our shortest cycle and most diverse business, we plan to improve from 8.4% in 2022 to 12-14%.
These targets are based upon our expectations for a 2027 timeframe. We expect a progressive, but not necessarily linear, improvement year-on-year, and if we can accelerate the achievement of our ambitions we will. These targets, the performance improvements that underpin them and the actions we require to achieve them, are owned across the Group and supported through rigorous performance management and clear lines of accountability. Our strong start to 2023 provides further confidence in our ability to deliver.

Strategic update

In February, we launched our transformation programme and strategic review to set out what we needed to do to take us to a new level of performance. We are building on our strong foundations and advantaged businesses to create a Rolls-Royce that can unlock its full potential.

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