Rolls-Royce Stock – Rolls-Royce Shares Skyrocket 11% After Dividend Reinstatement and Profit Upgrade

Rolls-Royce Stock – Shares of Rolls-Royce soared by more than 11% to an all-time high on Thursday following the company’s announcement of a dividend reinstatement and an upgraded profit forecast. By 9:20 AM London time, the stock had slightly pared its gains but was still trading 9.4% higher.

Strong First-Half Results and Revised Profit Forecast

The British aerospace and defense giant reported an underlying profit of £1.1 billion ($1.4 billion) for the first half of 2024. The company has revised its full-year profit forecast upward, now expecting to reach between £2.1 billion and £2.3 billion for 2024. This forecast is an increase from the previous guidance of £1.7 billion to £2.0 billion and exceeds market expectations.

Additionally, Rolls-Royce has raised its full-year free cash flow projection to between £2.1 billion and £2.2 billion, up from the earlier forecast range of £1.7 billion to £1.9 billion.

Dividend Resumption and Financial Resilience

After suspending dividends in 2020 due to the pandemic-induced halt in flying, Rolls-Royce will resume dividend payments for the full year of 2024. The company plans to initiate a 30% pay-out ratio of underlying profit after tax. This move reflects the company’s return to financial stability and growth.

CEO Tufan Erginbilgic, who took over the role in 2023 with a mission to revitalize the company, commented on the positive results. He emphasized that the company’s strategic plans, optimization, and cost efficiency programs are proving effective.

“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,” Erginbilgic said.

Increased Guidance and Shareholder Distributions

Erginbilgic also stated that the improved financial results and increased resilience have given the company confidence to raise its 2024 guidance and reinstate shareholder distributions.

Revenue Growth

Rolls-Royce’s group revenues climbed to £8.2 billion in the first half of 2024, up from £7 billion in the same period last year. The underlying operating profit reached £1.15 billion, a significant increase from £673 million the previous year.

Conclusion

The significant rise in Rolls-Royce’s share price and its positive financial outlook highlight the company’s successful recovery and strategic advancements. As Rolls-Royce navigates a complex supply chain environment, its focus on transformation and financial resilience positions it well for continued growth and shareholder value.

FAQ: Rolls-Royce Financial Performance

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