Rolls-Royce to Reveal £1.5bn Share Buyback as Annual Results Approach
Rolls-Royce, the FTSE 100 aerospace giant, is poised to announce a significant share buyback program worth up to £1.5bn this week. This move accompanies the release of its full-year financial results, where profits are anticipated to hit between £3.1bn and £3.2bn. The buyback will complement the company's final dividend, highlighting its strong cash generation capabilities.
Transformation Under CEO Tufan Erginbilgic
The initiative caps a remarkable transformation led by chief executive Tufan Erginbilgic, a former BP executive. Under his leadership, Rolls-Royce's valuation has soared to over £112bn, more than double its previous level. This new buyback builds on last year's £1bn scheme, which was the first since 2014, following the sale of its energy division.
Share repurchases were previously suspended in 2015 by then-CEO Warren East due to concerns about the firm's financial stability. Erginbilgic is also expected to receive a multimillion-pound increase in his annual compensation as part of an overhaul of the company's pay structure.
Stock Performance and Market Expectations
Rolls-Royce's stock has surged more than 122% over the past year, reaching a new peak of 1,346.50p last week amid a broader rally in defence stocks. City forecasters are eagerly awaiting Thursday's update, where Erginbilgic will provide insights into the past 12 months and forward guidance.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, commented, "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 noted that large engine flying hours, a key revenue driver, increased by 8% in the first 10 months of the year, reaching 109% of pre-pandemic levels, with a robust engine orders pipeline.
Chiekrie added, "But with a growing track record of over-delivering, analysts see scope for profits to land slightly ahead of this figure." This optimism reflects the company's ongoing recovery and strategic initiatives under its current leadership.
