Rolls-Royce soars 20% after return of dividend with £1bn buyback on top
Last updated: 10:59 27 Feb 2025 GMT, First published: 07:45 27 Feb 2025 GMT
Rolls-Royce Holdings PLC (LSE:RR.) shares soared 20% higher to a new all-time high of 760p as the engine maker brought back its dividend and announced a £1 billion share buyback, as well as upgrading profit and cashflow targets for the next four years.
Underlying operating profits of £2.5 billion were up 57% on the previous year as margins improved 3.5 points to 13.8%.
This was helped by revenues rising 17% to £17.85 billion, with top-line growth powered by growth at all three core divisions, with civil aerospace division increasing 24%, defence sales up 13% and power systems 11%.
As well as the buyback, a dividend of 6p per share was declared, based on a 30% payout ratio of underlying post-tax profit.
CEO Tufan Erginbilgic hailed growth from the core divisions "despite a supply chain environment that remains challenging" and said the results build on the transformation plan he kicked off the previous year.
"We are moving with pace and intensity. 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."
By 2028, the company now aims to make £3.6-3.9 billion of underlying operating profit at 15-17% operating margin, with £4.2-4.5 billion of free cash flow, and 18-21% return on capital.
Analysts at UBS said the results were "strong", with profits and free cash flow beating market expectations and guidance looking "significantly ahead".
** Update: Share price and analyst comment added **
