Rolls-Royce expectations high ahead of final results
Published: 16:04 19 Feb 2025 GMT
Rolls-Royce Holdings PLC (LSE:RR.) will publish final results on Thursday 27 February, with its shares having almost doubled over the past 12 months and risen almost sixfold over the past two years.
This represented a strong rebound from pandemic lows, leading to increased cash flow from long-term service agreements (LTSAs) with airlines seeing a recovery in air travel and engine usage, while new management has also made progress with a long-term restructuring after years of underperformance.
At an update in October, chief executive Tufan Erginbilgic said trading was in line with full-year outlook for an underlying operating profit £2.1-2.3 billion and free cash flow of £2.1-2.2 billion.
Analysts have been falling over themselves to up their expectations, including for a re-rating to similar levels that other European and US aerospace rivals command, something that has been thought of as impossible previously.
Even Donald Trump’s tariffs are not expected to dent the company too much.
The analyst consensus is for underlying revenue of £17.3 billion, feeding through to underlying operating profit at the top end of the range and earnings per share of 18.6p.
Free cash flow is also expected to be at the top of the guidance range leading to a dividend of 5.2p expected, plus some share buybacks.
Management are also expected to up guidance for 2025 to underlying profit of £2.6 billion and free cash flow of £2.6 billion, still below Erginbilgic's medium-term guidance out to 2027 for annual free cashflow of £2.8-3.1 billion.
There might be questions at the results about whether the company might emulate recent plans by US industrial conglomerate Honeywell to break itself up.
