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Teaching activity

In the News Teaching Activity – Rolls Royce’s profits increase after cost-cutting and rise in geopolitical tensions (Feb 2024)

Elizabeth Veal

29th February 2024

Rolls Royce has seen a sharp increase in its profits after shedding some workers and benefiting from a boost to its revenues.

The aerospace and defence firm, Rolls-Royce, has more than doubled its 2023 profits to £1.6bn, up from £652m in 2022, attributing its profit success to cost-cutting and heightened global tensions. CEO Tufan Erginbilgic's austerity plan, which includes up to 2,500 job cuts, is progressing and expected to be complete by the end of 2024. Meanwhile, defence orders for the engineering expert reached a record £9.2bn, boosted by the Aukus submarine deal. Rising sales in transport, combat and submarine markets have also improved revenues to £16.5bn, a 22% increase. The dent in Rolls Royce engine flying hours caused by the pandemic has almost disappeared, now just 12% lower than 2019 levels and large engine orders are also heading for pre-pandemic levels in 2024.

Rolls-Royce profits more than double amid cost cuts and global tensions | Rolls-Royce | The Guardian

1 Explain why there has been an increase in demand for the goods Rolls Royce produces.

2 Calculate the percentage rise in Rolls Royce’s profits from 2022 to 2023.

3 Using a cost and revenue diagram, analyse how the increase in demand for Rolls Royce products has helping increase its profits.

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Elizabeth Veal

Liz has taught Economics for over 25 years, including several years as Head of Economics at leading schools.

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