Rolls-Royce today announced its first dividend in five years, alongside a £1 billion share buyback and upgraded mid-term guidance. A much stronger balance sheet means the engine maker is set to pay 6p a share, equivalent to 30% of underlying profit after tax in today’s annual results.
Significant growth in margins meant underlying operating profit rose from £1.6 billion in 2023 to £2.5 billion in 2024, a 57% increase. Guidance for this year of £2.7 billion-£2.9 billion in terms of both underlying operating profit and free cash flow meets the company’s mid-term targets two years earlier than planned.
Its new medium-term ambitions are for £3.6 billion-£3.9 billion of underlying operating profit, 15%-17% operating margin and £4.2 billion-£4.5 billion in free cash flow. Chief executive Tufan Erginbilgic said: “We are moving with pace and intensity. These mid-term targets are a milestone, not a destination, and we see strong growth prospects beyond the mid-term.".
A calm response to results by tech giant Nvidia looks to have set the tone for a steady session by the FTSE 100 index. IG Index futures expects London’s top flight to open ten points lower, having risen by 0.7% by last night’s closing bell. Nvidia shares were slightly lower in after-hours dealings as “amazing” levels of demand for its new Blackwell chips boosted guidance for the first quarter.
The shares were 4% higher ahead of the results as the Nasdaq Composite climbed 0.3%. The Dow Jones Industrial Average fell 0.4% and the S&P 500 held firm. It was a similar story in Asia, where the Hang Seng index has consolidated its recent strong performance.
