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Rolls-Royce optimistic about cash outflow as market recovers, costs cut

FILE PHOTO: The Rolls-Royce logo is seen at the company's aerospace engineering and development site in Bristol
FILE PHOTO: The Rolls-Royce logo is seen at the company’s aerospace engineering and development site in Bristol, Britain, December 17, 2015. REUTERS/Toby Melville/File Photo

December 9, 2021

(Reuters) -Rolls-Royce expects its free cash flow for fiscal 2021 to be better than its previous guidance of £2 billion ($2.64 billion) due to cost cuts and recovery in the broader market, British engineering group said on Thursday. .

The company, which has more than 400 airlines and charter customers around the world, said it expects to eliminate more than 8,500 roles by the end of the year, with the pace of restructuring taking place ahead of schedule. .

The $2 billion sale of the ITP Aero unit in Spain helped Rolls-Royce meet its £2 billion liquidation target in September.

The company has been hit hard by the pandemic due to its exposure to the airline industry, forcing it to raise money and take out huge loans.

“While external uncertainties clearly remain, we have seen a gradual recovery in our civil aerospace business, growing orders in the electrical and has secured important contracts in the defense sector,” said Rolls-Royce CEO Warren East.

Improved trading performance helped the century-old company return to positive free cash flow in the third quarter, in addition to reduced cash outflows expected in the second half of the year.

(1 dollar = 0.7574 pounds)

(Reporting by Muvija M in Bengaluru; Editing by Sriraj Kalluvila and Subhranshu Sahu)

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Bobby Allyn

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