Rolls-Royce reports strong financial growth
February 27, 2025
Rolls-Royce has announced significant progress in its transformation strategy, reporting robust financial results for the year.
The company posted an underlying operating profit of £2.5 billion, with a strong operating margin of 13.8%, highlighting the impact of strategic initiatives, commercial optimisation, and cost efficiency measures.
Free cash flow reached £2.4 billion, supported by continued growth in Long-Term Service Agreements (LTSA) and a net cash balance of £475 million by year-end. In a boost for investors, the company confirmed a dividend of 6.0p per share for 2024.
Looking ahead, Rolls-Royce has set ambitious targets for 2025, forecasting underlying operating profits and free cash flow in the range of £2.7 billion to £2.9 billion. This marks a significant achievement, as the firm is on track to meet its Capital Markets Day mid-term targets two years ahead of schedule.
In a further move to enhance shareholder returns, the company has unveiled a £1 billion share buyback programme, set to commence immediately and be completed by 2025.
Longer-term projections have also been upgraded, with expectations of £3.6 billion to £3.9 billion in underlying operating profit, an operating margin of 15%-17%, and free cash flow of £4.2 billion to £4.5 billion by 2028.
Tufan Erginbilgic, CEO 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. 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.”
