Rolls-Royce lifts profit guidance, to buy back £1 billion stock

ROLLS-ROYCE Holdings raised its profit guidance and said it plans to buy back £1 billion (S$1.69 billion) of stock, as the aircraft engine maker seeks to extend a two-year turnaround.

Adjusted operating profit for this year will be in the range of £2.7 billion to £2.9 billion, Rolls said on Thursday (Feb 27) in a statement. That’s an increase from the £2.5 billion-£2.8 billion it forecast in August, and above consensus estimates. 

Chief executive officer Tufan Erginbilgic has streamlined the British industrial firm since joining two years ago, and the company has benefited from a rebound in the market for wide-body aircraft that use Rolls engines. 

Its stock has surged more than sixfold since the start of 2023, and buyback will help to further those gains. This year, Rolls shares have advanced 11 per cent.

Still, like others in the industry, Rolls has been struggling with supply-chain snags that have persisted since the pandemic. The company said on Thursday that supply-chain issues will have a £150-200 million cash impact “similar to 2024, with parts availability remaining constrained.”

Rolls-Royce has been grappling with maintenance issues with its engines that power Boeing’s 787 Dreamliner jet. The company was criticised by Virgin Atlantic Airways and British Airways after the carriers had to cancel some routes because of a lack of planes caused by the turbine problems. BLOOMBERG