Mon, Dec 04, 2023
Firm Wants More Shareholder Value, Less Scattered Approach to Aviation
Rolls-Royce's recent strategy release showed a minor pivot in the firm's plans to shore up its cash base over the coming years, even to the point of selling off their electric aviation wing to third parties.
"We are creating a high performing, competitive, resilient and growing Rolls-Royce that will have the financial strength to control and shape its own destiny," said Chief Exec Tufan Erginbilgic.
"In Civil Aerospace, we will focus on the widebody commercial airline market and business aviation where we can leverage the value from our Trent and Pearl engine families while investing for the future with our world-leading UltraFan engine programme," added Erginbilgic. "In Defence, we have opportunities for stronger performance and an increase in customer-funded investment across Transport, Combat and Submarines, where recently announced platform wins and international co-operations will drive further future growth."
Most unusual in a field where competitors are constantly jumping into electric flight systems is that Rolls-Royce will bail on the game entirely.
"We are also clear where we will not invest and re-allocate capital to parts of the business where we can generate more value. We are today announcing a Group-wide divestment program, targeting gross proceeds of between £1.0bn and £1.5bn over the next five years, which do not form part of our Free Cash Flow targets," said Erginbilgic. That doesn't imply a fire sale, however. He clarified that the frim "will only sell assets at the right time and at the right price."
He further explained that they would look at "For example, in we are looking at options to exit in the short run or alternatively for the right value, reduce our position to minority with an intention to exit fully in the mid-term. We believe, given the world-class capability we have built in Advanced Air Mobility, that this will represent good value to a third party and will allow us to focus on our core electrical engineering activities in Power Systems, Defence and Civil Aerospace."
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