Rolls-Royce (RR.L) will pay a dividend for the first time since the pandemic, driven by Chief Executive Tufan Erginbilgic’s successful recovery plan. The British aero engine maker raised its 2024 profit and cash flow forecasts, causing shares to jump 11% to a record high of 501 pence.
The company, which manufactures engines for Airbus’s long-haul jets, forecasted an operating profit of up to £2.3 billion for 2024, £300 million more than initially estimated. Erginbilgic, who joined Rolls-Royce in January last year, highlighted the fast pace of the transformation.
Rolls-Royce, Airbus’s exclusive engine partner for widebody planes and a supplier for Boeing’s 787, last paid a dividend in 2020. Erginbilgic cited increased financial resilience and better-than-expected results as reasons for reinstating shareholder distributions.
Analysts noted that civil aerospace performed exceptionally well, with flying hours exceeding pre-pandemic levels and 120 large engines delivered. Despite supply chain challenges, Rolls-Royce’s operating margin rose to 14%, with civil aerospace achieving an 18% margin.