Rolls-Royce has hiked its full-year guidance and announced plans to reinstated its dividend after profit nearly doubled year-on-year.
The FTSE 100 giant said it would start pay-outs when it reports 2024 full-year results. These would begin at a 30 per cent ratio of underlying profit after tax, with an ongoing pay-out ratio of 30 to 40 per cent per year.
It came as Rolls hiked full-year guidance for underlying operating profit to between £2.1bn and £2.3bn, and free cashflow to between £2.1bn and £2.2bn.
Tufan Erginbilgic, chief executive, said: “Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is proceeding with pace and intensity. We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing.”
Both pre-tax and operating profit nearly doubled to £1.04bn and £1.1bn respectively. Underlying revenue increased to £9.2bn, from around £7bn.
Tufan Erginbilgic, CEO of Rolls-Royce
Rolls-Royce enjoyed an exceptional share price rally last year after bringing in Erginbilgic to spearhead a turnaround. That rise has continued into 2023, with shares up over 50 per cent this year to date.
Booming travel demand has led to higher orders for the FTSE 100 giant’s jet engines. At the same time, its defence order book has reached record levels, bolstered by contract awards for the Aukus submarine defence agreement and increasing geo-political tension aroaund the globe.
Erginbilgic added: “Our strong first half results reflect the continued delivery of our strategic initiatives and a relentless focus on commercial optimisation and cost efficiencies across the Group. These results and our increased financial resilience give us the confidence to raise our 2024 guidance and reinstate shareholder distributions in respect of the full year 2024 results.”
Basic earnings per share now sit at 8.95p, up from 4.9p last year.