Rolls-Royce shares surged more than 11 per cent to an all-time high on Thursday after the company reinstated its dividend and raised its profit forecast on the back of strong first-half results, CNBC reports.
Shares retraced some of the gains and were trading 9.4 per cent higher by 9:20 a.m. London time.
The British aerospace and defence company reported an underlying profit of 1.1 billion pounds ($1.4 billion) in the first half of the year and said it expects that to rise to 2.1 billion to 2.3 billion pounds in 2024.
This is above the £1.7-2.0bn forecast presented in the full-year 2023 results and ahead of market expectations. Full-year free cash flow is forecast to increase to £2.1-2.2bn, up from the previous forecast of £1.7-1.9bn.
The company, which supplies aircraft giants Boeing and Airbus, also said it would resume dividend payments for the full year 2024, starting at a ratio of 30 per cent 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 took over in 2023 to revive the company, said the strong results were a sign that the company’s plans, optimisation and cost efficiency programmes were taking shape. He said in a statement:
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. 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.
Group revenue rose to £8.2bn in the first half of the year, up from £7bn in the same period last year. Underlying operating profit was £1.15bn, up from £673m last year.
