Rolls-Royce reinstates dividends as operating profits surge to £1.15bn
Engine maker Rolls-Royce has raised its full-year profit outlook and announced plans to resume shareholder dividend payouts for the first time since the pandemic.
The group saw shares surge 10 per cent as it cheered investors with news that it will hand out a dividend at its full-year, having last made such a payout in 2020 just before Covid struck.
Rolls, an aerospace engineering specialist, made the pledge as it revealed underlying operating profits surged 74 per cent to £1.15bn in the first half of 2024, up from £673m a year ago.
Underlying pre-tax profits nearly doubled to £1.04bn from £524m a year earlier.
It lifted its guidance for full-year underlying operating profits to between £2.1bn and £2.3bn, up from the £1.7bn to £2bn previously forecast.
Rolls has been undergoing an intensive overhaul led by boss Tufan Erginbilgic, who is taking action to cut costs by £400m to £500m, with £250m due to be stripped out by the end of this year.
The firm said on announcing the cost cutting programme that between 2,000 to 2,500 roles would go as part of the plans.
It is also benefiting from the pick up in international travel since the pandemic, given that the company makes the bulk of its revenues through maintaining and servicing its engines.
Mr Erginbilgic, chief executive of Rolls, said the group is “expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing”.
He 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.”
The company also saw growth in its defence wing, with revenue increasing 18 per cent to £2.2bn, up from £1.9bn in the first half of 2023.
A statement from the firm said: “Demand remained strong, notably across Combat and Submarines, with order intake of £1.7bn in the period. This brings our order backlog to £8.5bn at the end of the period, with order cover approaching 100 per cent for the remainder of 2024.”