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Rolls-Royce Restructuring Plans On Track; Expects To Turn Cash Flow Positive In H2 Of FY21

Rolls-Royce Holdings plc (RYCEF.PK,RR.L,RYCEY.PK), in its trading update on Friday, said its restructuring plans are on track to deliver targeted 1.3 billion pounds cost savings by 2022, and a reduction of at least 9,000 roles.

More than 5,500 roles will have been removed by the year end, ahead of prior expectation of over 5,000.

Further, the company continues to expect to turn cash flow positive at some point during second half of fiscal 2021, target at least 750 million free cash flow as early as 2022 and at least 2 billion pounds from disposal proceeds.

In the 11-month period to end November, large engine LTSA invoiced flying hours or EFH were approximately 42% of their prior year level. In October and November combined, EFH increased to approximately 33% compared to 2019. In the third quarter, EFH were 29% of the prior year, an improvement versus the 24% seen in Q2.

The company said it has reduced the pace of production for large engines and full-year guidance for approximately 250 deliveries is unchanged.

The company said the restructuring following weak demand for Civil Aerospace products is ongoing.

Rolls-Royce is in consultation regarding the next phase of Civil Aerospace footprint review, which includes a proposal to transfer facility and workforce in Hucknall, UK into ITP Aero.

The company is also proposing to consolidate the manufacture of aero-engine structures into ITP Aero. These difficult but necessary decisions will help generate efficiency savings for the Group and strengthen ITP Aero's capabilities.

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