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Rolls-Royce announces strong 2024 financial results

Rolls-Royce has reported robust financial results for 2024, marking a significant turnaround for the aerospace and defence manufacturer.

The company announced a share buyback of up to £1bn and reinstated its dividend, reflecting its improved financial health and confidence in future growth.

Chief executive Tufan Erginbilgiç said: "Strong 2024 results build on our progress last year, as we transform Rolls-Royce into a high-performing, competitive, resilient, and growing business. All core divisions delivered significantly improved performance, despite a supply chain environment that remains challenging. We are moving with pace and intensity."

The company's underlying operating profit for 2024 was £2.5bn, with a margin of 13.8%, driven by strategic initiatives, commercial optimisation, and cost efficiency benefits. Free cash flow reached £2.4bn, supporting a net cash balance of £475m at the end of the year. Rolls-Royce declared a dividend of 6.0p per share for the full year 2024, based on a 30% payout ratio of underlying profit after tax.

The company's civil aerospace division saw a significant increase in flying hour revenues, contributing to improved profitability. Defence division performance was bolstered by increased demand and operational improvements. Power Systems division also achieved substantial growth, driven by strong order intake and execution.

Rolls-Royce's transformation program continued to deliver results, with a focus on cost efficiency, commercial optimization, and operational improvements. The company successfully reduced costs and improved margins across all divisions, despite ongoing supply chain challenges.

Looking ahead, Rolls-Royce has upgraded its mid-term targets, expecting to deliver underlying operating profit of £2.7bn-£2.9bn and free cash flow within the same range in 2025. The company aims to achieve underlying operating profit of £3.6bn-£3.9bn and free cash flow of £4.2bn-£4.5bn by 2028.

Erginbilgiç added: "Based on our 2025 guidance, we now expect to deliver underlying operating profit and free cash flow within the target ranges set at our Capital Markets Day, two years earlier than planned. Significantly improved performance and a stronger balance sheet gives us confidence to reinstate shareholder dividends and announce a £1bn share buyback in 2025. 

Our upgraded mid-term targets include underlying operating profit of £3.6bn-£3.9bn and free cash flow of £4.2bn-£4.5bn. These mid-term targets are a milestone, not a destination, and we see strong growth prospects beyond the mid-term."

www.rolls-royce.com