Rolls-Royce has stated that its expectations for the 2024 financial year are unchanged, despite a "challenging supply chain environment".

The firm’s full year guidance has set its underlying operating profit at between £2.1bn-£2.3bn, while its free cash flow remained unchanged between £2.1bn-£2.2bn.

Rolls-Royce said that while demand for its civil aerospace and defence sectors has remained strong, the supply chain in the aerospace continues to remain challenging.

However, it said it continues to work with "focus and intensity" across its supply chain to support growing organisational engineering and aftermarket volumes, adding that it has concentrated its efforts on 15 suppliers where interventions have driven performance improvements.

Chief executive officer (CEO) at Rolls-Royce, Tufan Erginbilgiç, said that there is more that the firm wants to do as it expands the earnings and cash potential of the company.

He said: "Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business continues with pace and intensity.

"Continued good performance year to date gives us further confidence in the delivery of our 2024 guidance despite a supply chain environment which remains challenging. We are also making good progress towards our mid-term targets, with a front-end loaded delivery of profit and cash flow improvements."

The announcement comes after the firm launched its new organisational design, which aimed to create a "leaner, more focused organisation with fewer layers".

It also gifted all of its employees with 150 shares in the company in September, when it launched its new purpose and behaviours across the organisation.

Rolls-Royce added that it is reinstating shareholder distributions in line with its 2024 full year results, starting at a 30% payout ratio of underlying profit after tax, with an ongoing payout ratio of 30-40% each year following.

Despite this commitment, investment director at AJ Bell, Russ Mould, believes that the market is not fully convinced.

He stated: "Rolls-Royce may have stuck with its guidance but the market appears to be concerned nonetheless about the impact on the business of a ‘challenging’ supply chain environment.

"Tough-talking Erginbilgiç’s transformation of the business has already been recognised by the market and that has left very little margin for error, so it’s not a surprise to see the shares take a modest step back today.

"Assuming the supply chain issues referenced by the company don’t get any worse, today’s modest sell-off may be chalked up as nothing more than mild turbulence rather than anything more concerning."

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