Rolls-Royce has brought back its dividend as the engineering titan roars back from its pandemic-era crisis.
Tufan Erginbilgic, who took charge in January last year, said shareholders would receive a payout for the current financial year worth 30-40pc of the FTSE 100 company’s underlying profits.
That is expected to amount to about 5-5.5p per share based on the latest forecasts, which were upgraded on Thursday.
Rolls, which makes engines for commercial aircraft, naval vessels and military jets, has not paid a dividend in five years.
The company, under previous boss Warren East, had a payout planned in 2020 but cancelled it after the coronavirus pandemic shut down international air travel and decimated its finances overnight.
Mr Erginbilgic’s decision to restore the dividend marks another symbolic moment on the company’s path back to success, after the chief executive – known as “Turbo” by City analysts – launched a top-to-bottom overhaul of the business.
The news sent shares in Rolls rocketing up 11pc in early morning trading to hit a record high.
On Thursday, Mr Erginbilgic said: “Our transformation of Rolls-Royce into a high-performing, competitive, resilient and growing business is 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.”
It came as Rolls also upgraded its profit forecast for 2024. In half-year results, the company predicted a full-year underlying operating profit of £2.1bn to £2.3bn, compared to analyst expectations of around £2bn. This is the figure the dividend will be based on after taxes and any other payables are deducted.
The new target for free cash flow of £2.1-2.2bn is also up from an earlier prediction of £1.7-1.9bn.
For the first half of 2024, Rolls reported sales of £8.1bn up from £6.9bn a year earlier. Underlying operating profits, meanwhile, leapt from £673m to £1.2bn.
The company previously reported blockbuster annual results in February that saw profit margins double and record free cash flows.
Under Mr Erginbilgic, Rolls’s share price has risen more than 400pc and the company’s prized “investment grade” status has been restored by credit rating agencies.
