Rolls-Royce has reinstated dividends and unveiled a £1bn share buyback programme as full-year profit comfortably beat expectations.
The FTSE 100 engineering giant on Thursday proposed a 6p per share dividend for investors in what marks the first payout since before the pandemic.
A £1bn share buyback programme will also commence immediately and be completed through 2025, it said in a statement to markets.
Revenue of £17.8bn also beat analysts’ consensus of around £17.3bn.
On the back of this strong performance, Rolls-Royce hiked its medium-term targets for profit and free cash flow.
Underlying operating profit is now expected to fall in the range of £3.6bn and £3.9bn by 2028, while free cash flow is expected to come in at between £4.2bn and £4.5bn.
“We are moving with pace and intensity,” chief executive Tufan Erginbilgic, who has engineered a remarkable turnaround in his first two years, said in a statement.
“Based on our 2025 guidance, we now expect to deliver underlying operating profit and free cash flow within the target ranges set at our Capital Markets Day, two years earlier than planned.
He added: “Significantly improved performance and a stronger balance sheet gives us confidence to reinstate shareholder dividends and announce a £1bn share buyback in 2025.”
Shares in Rolls-Royce have surged since Erginbilgic joined in January 2023 as a cocktail of booming travel demand and geopolitical tension fuel orders for its jet engines and defence technology.
The stock price has almost doubled over the past 12 months and rose almost sixfold over the past two years.