On Tuesday, July 23rd, 2024, on the second day of the Farnborough International Air Show in Farnborough, UK, a model of the Rolls-Royce Holdings PLC stands.
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British aerospace group Rolls-Royce on Thursday posted an exceeded expectations of full-year revenue, upgraded its medium-term guidance and declared a stock repurchased £1 billion ($1.27 billion) with stock buybacks.
Rolls-Royce, which manufactures jet engines for commercial aircraft along with ship and submarine power systems, reported operating profit of £2.46 billion in 2024, exceeding analyst expectations, reflecting a 57% increase from the previous year.
The company added that its operating profit is expected to rise from £3.6 billion to £3.9 billion over the medium term, after saying its robust delivery in 2023 and 2024 allowed it to meet its mid-term target two years ago.
Rolls-Royce also announced a dividend of 6p per share, reviving payments after a five-year break, and said that a £1 billion share buyback will be completed during 2025.
Citi analysts described the full year results as “very strong.”
Previously listed London-listed Rolls-Royce shares rose 19% in the news, hitting an all-time high. Stocks rose 16% due to market closures.
“We’ve been on a multi-year, transformational journey two years ago (and) we’ve made great strides,” Rolls-Royce CFO Helen McCabe told CNBC’s “Squawk Box Europe” on Thursday.
“It’s the culmination of us following our promises,” McCabe said, citing expanding the revenue potential of engine manufacturers and improving their balance sheets.
Supply Chain Disruption
Rolls-Royce said profits for 2024 increased due to robust performance in business aviation and improved terms of contract.
The revenue reflects the company’s transformation progress since former BP executive Tufan Erginbilgic took the reins as CEO in January 2023. At the time, Erginbilgic described it as a “burning platform” that requires a change in the way it works to survive.
Rolls-Royce’s McCabe said Thursday that the company welcomed the UK government’s recent pledge to increase defence spending to 2.5% of GDP from April 2027, describing its commitment as “optimal for UK security.”
Looking ahead, McCabe said the company’s two biggest risks are safety and supply chains.
“There are two things we are constantly worried about at that moment: safety, always being safe at the forefront of our minds,” McCabe said.
“And, as mentioned before, the supply chain. It has caused so much disruption throughout the industry, and it’s very unstable,” she added.
