Rolls-Royce (LON: RR) has reported half-year results today, revealing a £5.4bn loss amid the pandemic.
The engineering giant suffered from the slump in air travel demand, which the chief executive said he expects to impact the group for the next few years.
Underlying revenue fell 26% to £5.8bn.
“We ended 2019 with good operational and financial momentum. However, 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. We have responded rapidly to increase our liquidity, with £6.1bn at the end of H1 and a further £2.0bn term loan agreed in H2, to help weather the continued uncertainty around the timing and shape of the recovery in the civil aviation sector,” said Warren East, the chief executive.
Rolls-Royce is currently undergoing a major restructuring where it is planning to close factories and axe 3,000 UK jobs. In other cost-saving measures, the group has also said that it plans to sell its Spanish unit ITP Aero and other assets to raise £2bn.
“We have made significant progress with our restructuring, which includes the largest reorganisation of our Civil Aerospace business in our history. This restructuring has caused us to take difficult decisions resulting in an unfortunate but necessary reduction in roles. 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,” said East.
“While our actions have helped to secure the Group’s immediate future, we recognise the material uncertainties resulting from COVID-19 and the need to rebuild our balance sheet for the longer term. We have identified a number of potential disposals that are expected to generate proceeds of more than £2bn, including ITP Aero and a number of other assets. Furthermore, in light of ongoing uncertainty in the civil aviation sector, we are continuing to assess additional options to strengthen our balance sheet to enable us to emerge from the pandemic well placed to capitalise on the long-term opportunities in all our markets.”
Shares in Rolls-Royce (LON: RR) fell 6% on opening and are currently trading -7.83% (0908GMT).