Rolls-Royce believes supply-chain difficulties will persist for up to two more years, as the manufacturer sets aside £410 million ($518 million) in provisions, particularly aimed at the civil aerospace division.
Chief financial officer Helen McCabe, speaking during a full-year briefing on 22 February, said the macro-economic environment has put “many supplier bases under pressure”, with high inflation and interest rates, and lack of credit in some markets when volume is growing.
She says the manufacturer has taken “very practical” actions to address the situation.
If key suppliers have been in distress, says McCabe, Rolls-Royce has sent in a “task force” to assist – in one case this involved providing 40 personnel to offer support.
Rolls-Royce expects the supply chain will remain “challenging” for another 18-24 months.
McCabe says the company is looking at various relevant aspects of its strategy, such as dual-sourcing.
“We are very pro-actively leaning in to mitigate [the problems] as much as possible,” she says, adding that the company has taken actions which have generated a £130 million benefit.
Rolls-Royce says the £410 million in new provision to deal with supply-chain constraints has “more than offset” the release of £385 million in previous provisions taken to deal with onerous contracts.
