Rolls-Royce has said it will return £1.5bn to shareholders as the British jet engine manufacturer paid its dividend for the first time since the coronavirus pandemic.
The FTSE 100 company announced on Thursday its underlying operating profits rose 55% in 2024 to £2.5bn, as it upgraded its guidance for future earnings.
Rolls-Royce made underlying sales of £17.8bn during the year, up 15% compared with 2023. It generated £2.4bn in cash, nearly double the previous year.
The manufacturer, which has operations ranging from civil aviation to fighter jet engines and nuclear reactors for submarines, was forced to raise billions of pounds in emergency funding during the pandemic as long-haul air travel ground to a halt.
The company survived the existential scare but it appointed Tufan Erginbilgiç to take over as chief executive in 2023 with a mandate to raise its valuation. His efforts to charge customers more coincided with the recovery of air travel and the prospect of increased spending on defence after Russia’s full-scale invasion of Ukraine.
In 2024, the number of hours flown by Rolls-Royce engines on passenger jets surpassed 2019 levels for the first time. The company supplies engines for Airbus’s larger, twin-aisle planes, as well as to Boeing’s twin-aisle 787, but it is also considering a return to the lucrative market for jet engines on single-aisle planes.
Erginbilgiç said the company would this year meet operating profits targets set in late 2023, two years early. That was despite a warning that supply chain disruptions, which cost it up to £200m during the year, could persist for a further 18 months.
Erginbilgiç said: “Strong 2024 results build on our progress last year, as we transform Rolls-Royce into a high-performing, competitive, resilient and growing business. All core divisions delivered significantly improved performance, despite a supply chain environment that remains challenging.
“Significantly improved performance and a stronger balance sheet gives us confidence to reinstate shareholder dividends and announce a £1bn share buyback in 2025.”
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The dividend will be worth 6p a share, or about £500m, to be paid in June 2025. That was combined with a £1bn share buyback.
Erginbilgiç said the company would aim to increase its underlying operating profit to between £3.6bn and £3.9bn by 2028.
