Rolls-Royce Group PLC FY EPS 28.70p

Rolls-Royce Holdings said it swung to a pretax profit, boosted by cost savings and revenue that surged ahead of expectations.

The U.K. aerospace and defense company posted a pretax profit of 2.43 billion pounds ($3.07 billion) for 2023 compared with a pretax loss of GBP1.50 billion the year before.

Revenue rose to GBP16.49 billion from GBP13.52 billion, beating Visible Alpha consensus of GBP15.33 billion.

Underlying operating profit--a key metric that strips out exceptional and other one-off items--rose by GBP900 million to GBP1.59 billion. Free cashflow was GBP1.3 billion.

Rolls-Royce guided for 2024 underlying operating profit in the GBP1.7 billion to GBP2 billion range, with free cash flow guidance in the GBP1.7 billion to GBP1.9 billion range.

The company said large engine flying hours--a crucial aviation metric which enables operators to track and maintain the health and performance of aircraft engines--recovered to 88% of the levels of 2019, and were up 65% from 2022's levels.

Rolls-Royce said large engine orders in the year were the highest they have been in more than 15 years, and that work on various defense programs--such as the Aukus submarine agreement between Australia, the U.S. and the U.K.--was progressing well.

"Our strong delivery in 2023 gives us confidence in our 2024 guidance and is a significant step towards our midterm targets," Chief Executive Tufan Erginbilgic said.

Write to Anthony O. Goriainoff at anthony.orunagoriainoff@dowjones.com