Britain’s Rolls-Royce announced that its annual profit more than doubled last year, surpassing market expectations. The company foresees another significant increase in 2024, propelled by heightened utilization of aircraft powered by its engines, a surge in defence orders, and increased demand for data center services.
Under the leadership of Tufan Erginbilgic, the former BP executive who assumed the role of CEO a year ago, Rolls-Royce has experienced robust growth. In addition to powering ships, submarines, and manufacturing power generation systems, the company is renowned for producing engines for large commercial aircraft.
“We are unlocking our full potential as a high-performing, competitive, resilient, and growing Rolls-Royce,” he said in a statement on Thursday.
The profit improvement was partly driven by cost savings put in place by Erginbilgic and his pricing strategy which is aimed at making Britain’s biggest engineering name a higher margin business.
Last year’s group underlying operating profit came in at 1.6 billion pounds ($2 billion), well ahead of an analyst forecast of 1.4 billion pounds and its own guidance of 1.2-1.4 billion pounds, and compared to the 652 million pounds it made in 2022.
For this year, Rolls forecast underlying operating profit would rise by at least 6%, predicting a range of between 1.7 billion pounds and 2 billion pounds, compared to the current consensus forecast of 1.7 billion pounds.
Over the course of 2023, shares in Rolls-Royce rocketed over 200%, making it the top performer in Britain’s bluechip index, helped by a profit upgrade in July and an announcement in November that it could quadruple profit by 2027.