Rolls-Royce: FTSE 100 giant set to splash £1bn on shareholders
City darling Rolls-Royce is gearing up plans to dish out bumper returns to investors this week as the firm delivers its annual results.
The FTSE 100 giant is set to launch a buyback worth as much as £1.5bn, which will come on top of the company’s final dividend as the aircraft engineer looks to reinforce the size of its cashflow.
It follows the spectacular turnaround under boss Tufan Erginbilgic, former BP chief, which has seen the company’s value double to over £112bn.
The fresh buyback – as reported by Sky News – will follow last year’s £1bn program, which marked the first since 2014 after the engineer generated a surplus from selling its energy business.
Buybacks were halted in 2015 by former boss Warren East as concerns swelled about the stability of the firm’s balance sheet.
Erginbilgic is expected to pocket a multimillion pound annual pay rise as the aerospace giant rewrites its remuneration policy.
Rolls-Royce’s bumper year
Shares in Rolls-Royce have risen more than 122 per cent in the last 12 months and climbed to a fresh high last week at 1,346.50p amid a rally in the defence sector.
Analysts are pencilling in a bumper results report this Thursday, when Erginbilgic sheds some light on the last 12 months and future outlook.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “There’s been little sign of turbulence at Rolls-Royce of late, with strong demand in its Civil Aerospace business remaining a running theme.”
He added large engine flying hours, a key driver of revenue for Civil Aerospace, had grown by eight over the first 10 months of the year, reaching 109 per cent of pre-pandemic levels, with the firm’s engine orders pipeline holding strong.
The firm’s own guidance points to profits landing between £3.1bn to £3.2bn.
“But with a growing track record of over-delivering, analysts see scope for profits to land slightly ahead of this figure,” Chiekrie added.