Rolls-Royce shares experienced a remarkable surge of nearly 19% in London late Thursday morning as the company unveiled its full-year 2024 results, surpassing market expectations while reinstating dividends after a pause during the COVID-19 pandemic, aimed at conserving cash. The British aerospace and defense powerhouse reported that profit attributable to shareholders increased to £2.52 billion from £2.41 billion, alongside a sizable uplift in underlying operating profit, which climbed to £2.46 billion from £1.59 billion.
This robust performance can be attributed to a significant boost in revenue for the period, which rose to £18.91 billion from £16.49 billion, supported by double-digit growth across all three core divisions, notably in civil aerospace. "The strong results for 2024 build on our progress made last year, as we transition Rolls-Royce into a high-performing, competitive, resilient, and growth-oriented business," stated Chief Executive Tufan Erginbilgic.
The substantially improved performance and a fortified balance sheet have facilitated the decision to reinstate dividends for shareholders as well as announce a £1 billion share buyback program slated for 2025. The board proposed a final dividend of £0.06 per share for 2024, aiming to reward investors following the previous suspension.
The company also expressed intentions to initiate a £1 billion share buyback program immediately, projected to be completed throughout 2025. Looking towards the future, Rolls-Royce anticipates an underlying operating profit between £2.7 billion and £2.9 billion for the fiscal year 2025. Additionally, the mid-term targets for 2028 have been upgraded, including an objective for underlying operating profit in the range of £3.6 billion to £3.9 billion. "Considering our guidance for 2025, we now foresee delivering underlying operating profit and free cash flow within the target ranges set during our Capital Markets Day, achieving this milestone two years ahead of schedule," Erginbilgic noted. Analysts at AlphaValue/Baader Europe conveyed expectations of a strong and positive market response to the company's encouraging results.
"Rolls-Royce has not only exceeded expectations for FY-24 but has also laid the groundwork for impressive future growth with its strong financial performance and strategic advancements across its divisions. The upward revision of mid-term targets, along with a renewed focus on shareholder returns, highlights the company's confidence and resilience," they added..