Engine-maker Rolls-Royce has said it would restart its dividend after a four-year gap, as it predicted a rise in profits.
The company is forecasting a full-year underlying operating profit of between £2.1bn and £2.3bn ($2.70-2.95bn) for 2024, up to £300m more than it predicted in February.
In October it announced 2,500 job cuts from its global workforce of 42,000 to create a “more efficient and effective” company.
The Derby-based firm, which makes engines for aircraft, ships and submarines but also makes power generation systems, had not paid a dividend since 2020.
Shares in the company jumped 11% to an all-time high of 501p in early trading.
Chief executive Tufan Erginbilgic, who took up his post in January 2023, said his transformation of the company was proceeding with “pace and intensity”.
“These results and our increased financial resilience give us the confidence to raise our 2024 guidance and reinstate shareholder distributions in respect of the full year 2024 results,” he said.
The dividend, which will benefit employees in the company’s share-saving scheme among others, will start at a 30% pay-out ratio of underlying profit after tax, the group said.
It stated a strong first-half performance saw underlying operating profit rise to £1.15bn from £673m a year earlier.
Statutory operating profit was £1.64bn, up from £797m, due to exchange rate changes and improved valuations for its assets.
Rolls-Royce’s operating margin rose by 4.4% to 14%, with the biggest gain in its civil aerospace unit which delivered an operating profit margin of 18%.
When the job cuts – which are expected to be completed by the end of 2025 – were announced Rolls-Royce employed 13,700 people in Derby, 3,400 in Bristol, and has smaller bases in Lancashire, Glasgow, Tyne & Wear and Rotherham.
In April, the go-ahead was given for a major redevelopment of the firm’s Raynesway site in Derby, which could help create 1,000 jobs across the city.
Follow BBC Derby on Facebook, on X, or on Instagram. Send your story ideas to eastmidsnews@bbc.co.uk or via WhatsApp on 0808 100 2210.
Be the first to comment