Good morning: The troubled engineering group Rolls-Royce moved back into the black in the first half of the year, reporting an underlying operating profit of £307 million. The group made a £1.63 billion loss over the same period in 2020.
Civil aerospace, by far the group’s largest business, reported “recovery in business aviation and domestic large engine flying”. Roughly half of the division’s revenues come from the provision of aftermarket services linked to flying hours. Large engine flying hours were 43 per cent of the 2019 level, Rolls-Royce reported, up from the 34 per cent in the second half of 2020.
Rolls reiterated that it expected to turn free cash flow positive during the second half of this year, but warned that slower-than-forecast recovery in international air travel meant that a free cash flow target of at least £750 million “is likely to occur beyond the initial expected timeframe of 2022”.
Warren East, chief executive, said: “We are making disciplined investments in the new opportunities to drive future growth, particularly in net zero power where we are leading the way with innovation and engineering excellence.”
Alongside interim results the Sports Direct owner Frasers Group has confirmed that its founder Mike Ashley is planning to step back as chief executive and hand day-to-day management to Michael Murray, the 31-year-old boyfriend of his daughter.
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“The board of Frasers is now in discussions with regards to transitioning the chief executive role from Mike Ashley to Michael Murray over the course of 2022,” the company stated in a brief statement.
Murray — currently “head of elevation” at Frasers Group — would be one of the youngest ever chief executives of a FTSE 250 company.
The actual results show that the group made a pre-tax loss of £78 million in the year to April 25 as revenue slipped 8.4 per cent to £3.62 billion, down from £3.95 billion.
Elsewhere this morning:
• Gary Nagle, the new boss of Glencore, makes his City debut as the FTSE 100 commodities trader and miner posts interim results. Nagle, a Glencore lifer, previously ran the group’s coal business. The results show that adjusted ebitda rose to $8.65 billion in the six months to June, up 79 per cent on the same period last year. We have also got interim results this morning from the Russian steelmaker Evraz and Centamin, the London-listed goldminer.
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• WPP has posted a 54 per cent rise in headline operating profit to a better-than-expected £590 million in the six months to the end of June. The advertising group said net sales over the period rose 5 per cent to £4.89 billion, from £4.66 billion.
• Serco, the outsourcing group, reported a 58 per cent jump in its first-half profit as it was boosted by Covid-19 test-and-trace contracts and its US and Australian acquisitions. The company reiterated full-year profit and sales forecasts.
• The UK’s Financial Reporting Council has fined KPMG £13 million in relation to a conflict of interest case over the sale of the bed manufacturer Silentnight. KPMG had argued for a fine of no more than £5 million. The former KPMG partner David Costley-Wood was fined £500,000.
• Others updating this morning include Hammerson, the troubled shopping centre owner, IP Group, the technology investor, Mondi, the packaging group, Savills, the property agent, Spirent Communications, the communications technology company and Synthomer, the speciality chemical company.
Despite all the noise about inflation and a split vote in the run-up to the latest meeting of the Bank of England’s monetary policy committee it looks set to conclude with a whimper, rather than a bang. Economists expect the committee to vote 8-0 to keep the bank rate at 0.10 per cent and 7-1 to maintain the end-year target for government bond purchases at £875 billion.
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Richard
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