Rolls-Royce shares soar to all-time high on reinstated dividend, raised profit guidance

Shares of Rolls-Royce jumped more than 11% to hit an all-time high on Thursday after the company reinstated its dividend and raised its profit forecast on the back of strong first-half results.

Shares had pared gains slightly to trade 9.4% higher by 9:20 am London time.

The British aerospace and defense company reported underlying profit of £1.1 billion ($1.4 billion) in the first half of the year, and said it expects that figure to rise to between £2.1 billion and £2.3 billion for 2024.

That's up from the £1.7 billion to £2.0 billion forecast in its 2023 full-year results and ahead of market expectations. Full-year free cash flow was now projected to pick up to a range between £2.1 billion to £2.2 billion, up from a previous forecast between £1.7 billion and £1.9 billion.

The firm, which supplies aviation giants Boeing and Airbus, also said it would resume dividends for full-year 2024, starting at a 30% pay-out ratio of underlying profit after tax. It comes after pay-outs were suspended in 2020, when flying halted during the pandemic.

CEO Tufan Erginbilgic, who took the helm in 2023 to revitalize the company, said the strong results were a sign that the company's plans, optimization and cost efficiency programs were taking shape.

"Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is proceeding with pace and intensity. We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing," he said in a statement.

"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,"