Investing.com -- Rolls-Royce (LON:RR) shares hit a record high on Thursday following the company's announcement of its reinstated dividend and raised profit guidance for 2024.
At 4:11 am (0811 GMT), Rolls-Royce was trading 9% higher at GBP 490.
The company announced an increase in its full-year guidance, now expecting underlying operating profit to range between £2.1 billion and £2.3 billion, and free cash flow to fall between £2.1 billion and £2.2 billion.
The company also revealed plans to reinstate shareholder distributions starting at a 30% pay-out ratio of underlying profit after tax, with an ongoing pay-out ratio of 30-40% each year.
The company reported an increase in underlying operating profit and free cash flow for the first half of 2024, reflecting the positive impact of its strategic initiatives.
For the first half of 2024, Rolls-Royce posted an underlying operating profit of £1.1 billion, a 74% increase compared to the prior period, and an underlying margin of 14%.
The company benefited from its focus on commercial optimization and cost efficiency. Free cash flow increased to £1.2 billion, up from £0.4 billion in the previous year.
Rolls-Royce reduced its net debt to £0.8 billion, down from £2 billion at the end of 2023, and improved its return on capital to 13.8%.
“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,” said Rolls-Royce CEO Tufan Erginbilgic in a statement.