Capturing Performance Improvement Opportunities
Transactional foreign exchange
Rolls-Royce hedges transactional FX
•
Transactional exposure arises when revenue currencies differ from cost
currencies
•
% cover of forecast
net US$ income
£/$ exchange
rate
100%
Achieved rate is not typically affected by short-term spot rate movements
unless new cover is taken; this impact is usually diluted
80%
• $16 billion GBP: USD hedge book (average rate £/$1.54)
$2 billion EUR:USD hedge book (average rate €/$1.17)
60%
Each 1 $ cent change in the £/US$ hedge rate impacts pre-tax cash by
c£20-30m
1.6
1.5
1.4
40%
1.3
USD hedge book cash costs of closing out over-hedge positions
Costs are included in Group FCF definition
20%
1.2
Total cash outflow 2020 to 2026 £1,674m, of which £1,174m already paid
£m
2020
2021
H1
2022 2023 2023
H2
2024
2025-
2026
0%
1.1
2023
2024
2025
2026
2027
2028
Cash cost
186
452
326
210
179
146
175
1% Hedged
1% Unhedged
-Blended rate (RHS).
Market rate (RHS)
ROLLS
R
ROYCE
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