Rolls-Royce aims to raise £2bn in disposals after large HY loss

Aircraft engine maker Rolls-Royce said it was selling its Spanish business as it sought to raise £2bn after reporting a large interim loss and scrapping its dividend due to the coronavirus pandemic.

The company on Thursday said revenue fell 26% to £5.8bn as it posted a £1.7bn underlying operating loss, including £1.2bn in one-off charges in civil aerospace, largely related to COVID-19.

Reported pre-tax losses were £5.3bn in the six months to June 30, including £1.1bn in write-offs and impairments, a £2.6bn loss on foreign exchange hedging contracts, and restructuring costs of £366m.

The company saw £2.8bn in cash leave the business during the six months, as large engine flying hours were almost halved. Rolls said it expected a further outflow of £1bn in the second half of 2020.

Rolls-Royce has been battered as airlines grounded their fleets in response to the collapse in passenger demand. The company's revenues are dependent on airlines paying for flying hours on aircraft using its engines.

The company said its planned asset sell off would start with its Spanish engine and turbine business ITP Aero.

It also revealed that chief financial officer Stephen Daintith had quit to move to online retail technology firm Ocado, but would remain in his role to support an orderly transition.

“The COVID-19 pandemic has significantly affected our 2020 performance, with an unprecedented impact on the civil aviation sector with flights grounded across the world,” chief executive Warren East said in a statement.

Under East Rolls has been savagely cutting costs aiming to save £1bn a year. The company announced plans to cut 9,000 of its 52,000 staff in May and the company announced the closure of its Nottinghamshire plant on Wednesday.

Rolls-Royce said on Thursday that 4,000 staff members have now left the business.

“These actions will significantly reduce our cost base, which combined with recovery in Power Systems and continued resilience in Defence, will help us to deliver significantly improved returns as the world recovers from the pandemic,” East said.