Rolls-Royce shares rose more than 11% to hit a record high on Thursday after the company reinstated its dividend and raised its profit forecast on the back of strong first-half results.
Shares pared gains slightly to trade 9.4% higher at 9:20 a.m. London time.
The British aerospace and defence company reported underlying profit of £1.1 billion ($1.4 billion) in the first half of the year, and said it expects that figure to rise to between £2.1 billion and £2.3 billion by 2024.
This is higher than the £1.7bn forecast in its 2023 annual results and market expectations. Annual free cash flow is now forecast to rise to a range of £2.1bn-£2.2bn, up from a previous forecast of £1.7bn-£1.9bn.
The firm, which supplies aviation giants Boeing and Airbus, also said it would resume dividends for the full year 2024, starting with a payout rate of 30% of underlying profit after tax. This comes after payments were suspended in 2020 when flights were halted during the pandemic.
Chief Executive Tufan Erginbilgic, who takes over in 2023 to revitalize the company, said the strong results were a sign that the company’s plans, optimization and cost efficiency programs were taking shape.
“Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business is progressing at pace and intensity. We are expanding the business’s earnings and cash potential in a challenging supply chain environment, which we are proactively managing,” he said in a statement.
“These results and our increased financial resilience give us the confidence to raise our 2024 guidance and to reinstate shareholder distributions with respect to the full-year 2024 results,” added Ergin Bilgic.
Group revenues rose to £8.2 billion in the first half of the year, up from £7 billion in the same period a year earlier. Underlying operating profit was £1.15 billion, up from £673 million a year earlier.
Technically, it has completed what was missing, the free rise but with the threat of an upward trend from last year that was too vertical to allow the value to enter in any type of time frame.
