The stock of Rolls-Royce rose to its highest level in over a year today as the British engine company predicted a significant improvement in its financial performance in 2022.

The stock of Rolls-Royce rose to its highest level in over a year today as the British engine company predicted a significant improvement in its financial performance in 2022, aided by the recovery of international air transportation.

The business also stated that it has discovered prospects for significant profitability improvements and plans to conclude a strategic assessment later this year.

Underlying profits per share increased to 195 pence from 11 pence in 2021, while underlying operational profit increased by more than half to £652 million, as airlines throughout the world reactivated planes stalled by the Covid pandemic, renewing the maintenance payments that keep Rolls-Royce running. Large-engine flight hours increased by more than 35% last year.

The better operational performance, along with asset sales, transformed a £1.5 billion cash outflow in 2021 into a £505 million free cash inflow.

The business forecasts additional gains this year, with an average underlying operating profit of over £900 million and an average free cash flow of around £700 million.

"Although our performance improved in 2022, we are capable of much more," said CEO Tufan Erginbilgic, who had warned employees at the beginning of the year that their firm was in danger of following in the footsteps of Nokia's once-dominant mobile phone sector.

Erginbilgic has already halted its dividend in an effort to reclaim the investment-grade credit rating it held before to the pandemic. The need to reduce debt has grown more acute as the cost of servicing it has risen as a result of a year of aggressive interest rate rises by central banks worldwide. Because to asset sales, the company's net debt reduced to £3.2 billion from £5.5 billion last year.

According to him, the group's transformation effort would "increase our efficiency and commercial performance while delivering a sustainable decrease in working capital." A strategic evaluation, which is currently underway, will be completed in the second part of this year and will "focus our investment on the most profitable prospects."

(Investing.com, Rolls-Royce.com)