Rolls-Royce has said it is targeting a “step change in mid-term performance” as the company declared that a clear vision and strategy was necessary to create a high performing, competitive, resilient and growing business.

Mid-term targets are set to deliver record future performance: operating profit of £2.5bn-£2.8bn, operating margin of 13-15%, free cashflow of £2.8bn-£3.1bn and return on capital of 16-18%.

The improved financial performance will create a stronger balance sheet and investment grade profile for the benefit of all stakeholders.

Chief Executive Tufan Erginbilgic said: “Rolls-Royce is at a pivotal point in its history. After a strong start to our transformation programme, we are today laying out a clear vision for the journey we need to take and the areas where we must focus.

“We are creating a high performing, competitive, resilient and growing Rolls-Royce that will have the financial strength to control and shape its own destiny.

“We are confident in our ability to achieve these ambitions and have a clear and granular plan to deliver on our targets. We have made significant progress, with 2023 profit and cash forecast to be materially ahead of 2022.”

“We are setting compelling and achievable financial targets for the mid-term which will take Rolls-Royce significantly beyond any previous financial performance.

“This will benefit not just our shareholders but our people, customers and partners. We are building ‘one Rolls-Royce’. A company that can fully realise its potential, ensuring the excellence and innovation that helped shape the modern world, endures long into the future.”Subscribe to the FINN weekly newsletter