Investor Relations | CMD 2016
All figures are for Full Year 2015 unless otherwise stated.
Civil Aerospace – Operational Excellence Presenters
5% 2015 Group Revenue
H1 2016 Figure
£70.5bn
OE 67%
AM 33%
Order Book
23,200*
Overall there has been a slowdown in all major geographical markets for new aircraft orders reflecting a period of higher than normal order placement for new airframe products in recent years (principally Airbus A350 and A330neo, and Boeing 787 and 777X) Our current share in the widebody engine market is at 31% of the installed widebody passenger fleet and is expected to reach 50% in the first half of the next decade Long-term growth in the number of widebody aircraft in the global fleet has historically been strongly correlated to global GDP growth and disposable income
£m 2014 Underlying
Change Acquisitions &
Disposals Exchange 2015 Order book 63,229 3,800 - - 67,029 Engine deliveries 739 (27) - - 712 Underlying revenue 6,837 201 - (105) 6,933
Change +3% - -2% +1% Underlying OE revenue 3,463 (117) - (88) 3,258
Change -3% - -3% -6% Underlying services revenue 3,374 318 - (17) 3,675
Change +9% - +1% +9% Underlying gross margin 1,675 (139) - (10) 1,526 Gross Margin % 24.5% -270 bps 22.0%
Commercial and administrative costs (283) (14) - 1 (296) Restructuring costs (82) 75 - - (7) Research and development costs (461) (65) - 11 (515) Joint ventures and associates 93 8 3 104
Underlying profit before financing 942 (135) - 5 812 Change -14% -14%
Underlying operating margin 13.8% -230 bps 11.7%
Business Focus
Business Aviation • Powers the fastest, the longest-range, and the largest business jets • In the past decade, our engines have powered seven new business jets into
service • Total fleet of over 3,000 aircraft
Market Dynamics
Older widebody aircraft are experiencing reduced utilisation by certain airlines, in particular Boeing 777s and the four-engined Airbus A340s The introduction of the A330neo, announced in summer 2014, reduced Trent 700 sales ahead of the new Trent 7000 entering service in 2017 as the sole source engine for A330neo Increasing environmental legislation and efficiency requirements drive emission and efficiency technologies Historically, traffic growth has recovered quickly following major economic shocks
£6,655m £6,837m £6,933m
£844m £942m £812m
2013 2014 2015
Civil Aerospace Rolls-Royce powers more than 35 types of commercial aircraft and has over 13,000 engines in service around the world. Demand for our products remains robust and underpins strong performance
Airlines • Strong market position on widebody aircraft • Trent family of engines have all been either the launch engine for the airframe
for which it was designed, is the market leader on that application or both
www.rolls-royce.com www.facebook.com/RollsRoyceGroup
@RollsRoyce All figures are for Full Year 2015 unless otherwise stated.
This newsletter is for informational purposes only, it is not intended to contain any new material or non-public information relating to Rolls-Royce plc but is a summary of recent public announcements and as such may not be relied on. Nothing in this document should be construed as a profit forecast, however it may repeat certain statements that might be deemed to be forward-looking; such statements are made under the provisions of Rolls-Royce’s Safe Harbour Statement which can be found as part of our presentation materials on Rolls-Royce’s website http://www.rolls-royce.com/investors/results-centre
© Airbus S.A.S 2014
Employees Historic Revenue & Profit
Underlying Revenue
2015 Group Revenue
Revenue Breakdown
52%
£6.9bn
47% 53% AM
OE
63% 37%
Large Small &Med
LTSA* 38%
T&M 15%
OE 47%
*FY15 Average
*Long Term Service Agreement
Mike joined Rolls-Royce in 1985 as an Engineering Apprentice. In 2013 he was appointed Chief Operating Officer - Supply Chain and worked in this capacity for three years. Now, Mike leads our Civil Aerospace Operations team, including Component Engineering, Manufacturing, Purchasing, Assembly and Test, whilst also managing all wholly-owned MRO facilities to deliver value stream alignment to our customers.
Caroline joined Rolls-Royce in 1997 after gaining a PhD in Combustion Chemistry and has held several leadership roles in Civil Aerospace Operations. In 2012 she relocated to Shanghai in the position of Regional Supplier Management Executive for Asia. In her current role as Civil Aerospace Operations – Purchasing Director she is responsible for delivering the purchasing transformation programme in Supply Chain Operations.
Mike Mosley Director, Operations – Civil Aerospace
Caroline Chambers EVP Purchasing – Aerospace Supply Chain
Civil Aerospace – Operational Excellence • Investing in capacity to deliver the ramp up in large
engine production • Improving efficiency through advanced manufacturing and reducing
footprint to drive down fixed cost• Driving value in external supply chain: commodity sourcing approach
and working collaboratively with suppliers to reduce cost of components • Engaging our 20,000 people in continuous improvement, application
of lean thinking and High Performance Culture
Lean thinking delivering lead time reduction
Creating value in our external supply chain Continuous improvement
Modernising our facilities • 20% footprint reduction by 2020 • Removing costs incurred from underutilised and
aging infrastructure Advanced manufacturing • Optimised layout to minimise movement of parts • New methods of manufacture using automation
to deliver higher levels of repeatability • Investing in state of the art machine tools
increasing productivity
4x improvement in turbine blade pre-cast throughput
70% purchased 30% internally manufactured
Global commodity sourcing • Using commercial leverage to secure
product cost reduction • Collaborating with suppliers to improve
quality, cost and delivery performance • Maximising the capability of our global
supply chain
Strong partnering relationships • Established joint ventures to secure key
technology and future capabilities
< £0.5bn ~ £1bn
2016 2020
Trent 1000
West East sourcing delivering cost and
performance benefits
Trent XWB
50% reduction in
manufacturing lead time for
fan discs
Transforming our internal facilities
>£0.7bn invested in industrial modernisation since 2010