Rolls-Royce reinstates shareholder distributions after strong first half results

Rolls-Royce has posted strong first half results for 2024 with underlying revenues at £8.2bn, up from nearly £7bn a year prior. In addition, its operating profit was up from £673 million last year to £1.1bn in this year's first half results. The positive results come amid a challenge supply chain environment. As a result, the company has reinstated its shareholder distributions for full year - starting at a 30% pay-out ratio of underlying profit after tax, with an ongoing pay-out ratio of 30-40% each year. Underlying profit before tax was up from £524 million last year to £1.03bn this year. The company said this was driven by its commercial optimisation and cost efficiency benefits across the company. Its underlying profit margin rose by just over four percentage points to 14%. The company's largest improvement was in its civil aerospace segment, which delivered an operating margin of 18% - up from 12.4% in the first half of last year. It was driven by higher aftermarket profit from large engine long-term service agreements, as well as time and materials, stronger performance in business aviation, and aftermarket and net contractual margin improvements. ""Our transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is proceeding with pace and intensity,"" said Rolls-Royce Holdings CEO Tufan Erginbilgic. ""We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing. We are on track to deliver our mid-term targets. Rolls-Royce raised its full year guidance: it now expects an underlying profit between £2.1bn and £2.3bn, along with a free cash flow of around £2.1-£2.2bn. The company reduced its net debt from nearly £2bn at the end of last year, down to £822 million at the end of the second quarter of 2024. In addition, it produced a free cash flow of £1.7bn in the first half of the year, compared to £925 million in the same period last year. As of 12:03 BST, the British company's stocks were up nearly 11%.