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Rolls-Royce boosts guidance and leans on defence, AI and nuclear
The company lifted its full year cash flow outlook to a range of £3.8bn to £4.0bn and raised operating profit forecasts to £4.7bn to £4.9bn, according to its half year results.
Rolls-Royce’s outlook improved after the company reported half year results that included upgrades to full year forecasts, strengthening the case that its mix of defence, AI and nuclear energy businesses can support continued valuation growth, according to the Guardian Business.
The outlet said Rolls-Royce’s valuation is now about £120bn, placing it roughly level with Rio Tinto for fourth place in the FTSE, but still behind Shell at £185bn, AstraZeneca at £198bn, and HSBC at £274bn.
Guardian Business reported that Rolls-Royce now expects full year cash flow to be £200m higher than previously predicted, with a new range of £3.8bn to £4bn. It also said operating profit guidance was increased by £700m to £4.7bn to £4.9bn.
The company’s forecasts were linked to ongoing efforts to invest in engine reliability to support contract renegotiations with airlines, the Guardian Business said. It added that the stock’s longer term growth case also depends on progress beyond widebody engines, including defence work such as nuclear propulsion systems for the UK’s submarines and expansion in its power systems business.
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