Rolls-Royce stock surges to a record high due to reinstated dividend and increased earnings forecast.

• On Thursday, Rolls-Royce's shares surged over 11% to reach a new record high, following the company's decision to reinstate its dividend and improve its earnings outlook.
• Tufan Erginbilgic, CEO, stated that the aerospace and defense company's overhaul plans were progressing smoothly based on the strong first-half results.
• He stated that the financial resilience and the results give him the confidence to increase the 2024 guidance.

On Thursday, the stock price of surged over 11% to reach a new record high after the company announced the reinstatement of its dividend and an increase in its earnings forecast based on impressive first-half performance.

By 9:20 am London time, shares had slightly reduced their gains, trading 9.4% higher.

The aerospace and defense company based in Britain reported a first-half profit of £1.1 billion ($1.4 billion) and anticipates a 2024 profit range of £2.1 billion to £2.3 billion.

The full-year free cash flow forecast for the company has been revised from £1.7 billion to £2.0 billion, surpassing market expectations. The range for full-year free cash flow is now projected to be between £2.1 billion and £2.2 billion, an improvement from the previous forecast of £1.7 billion to £1.9 billion.

The aviation supplier, which provides to Boeing and Airbus, announced it would resume full-year 2024 dividends, starting at a 30% pay-out ratio of underlying profit after tax. This decision was made after dividends were halted in 2020 due to the pandemic.

Tufan Erginbilgic, CEO since 2023, stated that the company's strong results were evidence of the successful implementation of its plans, optimization, and cost efficiency programs.

The transformation of Rolls-Royce into a high-performing, competitive, resilient, and growing business is progressing with pace and intensity. We are actively managing the challenging supply chain environment while expanding the earnings and cash potential of the business.

Erginbilgic stated that the company's financial resilience and the positive results have given them the confidence to increase their 2024 guidance and reinstate shareholder distributions for the full year 2024.

In the first half of the year, revenues increased to £8.2 billion from £7 billion in the same period the previous year, while underlying operating profit rose to £1.15 billion from £673 million in the prior year.