Rolls-Royce Shares Reach Record High After Dividend Announcement

Shares of Rolls-Royce soared over 11% to reach an all-time high on Thursday, buoyed by the company's decision to reinstate its dividend and raise its profit forecast after reporting robust first-half results. By 9:20 am London time, the stock had settled at a 9.4% increase. The British aerospace and defense firm announced an underlying profit of £1.1 billion ($1.4 billion) for the first half of the year, projecting a rise to between £2.1 billion and £2.3 billion for 2024, surpassing previous estimates. The company also revised its full-year free cash flow expectations, now anticipating a range of £2.1 billion to £2.2 billion, an increase from the earlier forecast of £1.7 billion to £1.9 billion. Rolls-Royce, a key supplier to aviation giants Boeing and Airbus, confirmed that it would resume dividend payments for the full year 2024, starting with a 30% payout ratio of underlying profit after tax, marking a significant shift since dividends were suspended in 2020 due to the pandemic's impact on air travel. CEO Tufan Erginbilgic, who took over in 2023, expressed confidence in the company's transformation efforts, highlighting the positive results as evidence of effective optimization and cost efficiency programs. He emphasized that the company is navigating a challenging supply chain environment while expanding its earnings and cash potential, which has led to the raised guidance for 2024 and the reinstatement of shareholder distributions.