Rolls-Royce: Record 2024 Results and £1bn Buyback

Rolls-Royce has delivered a standout performance in 2024, with record-breaking financial results, a strengthened mid-term outlook and a £1bn share buyback set for 2025. A major focus on manufacturing efficiency, operational improvements and cost control is driving the company’s transformation.

Underlying operating profit reached £2.5bn, with a 13.8% margin, while free cash flow rose to £2.4bn, leaving the company with a net cash balance of £475m. Shareholders will receive a dividend of 6.0p per share, based on a 30% payout ratio of underlying profit after tax.

“We are expanding the earnings and cash potential of Rolls-Royce,” said Chief Executive Tufan Erginbilgic on LinkedIn.

“Alongside delivering significantly improved performance, we are creating a sustainably distinctive business in terms of safety, operational effectiveness and customer service, with advantaged technologies and products, combined with a distinctive performance culture.

“We are transforming Rolls-Royce into a high-performing, competitive, resilient and growing business. Today’s results marked another important milestone on that journey. I am very proud of the Rolls-Royce team and what we have delivered so far.”

Strengthened financial position and ambitious growth targets

The company’s 2025 guidance projects £2.7bn-£2.9bn in underlying operating profit and free cash flow, achieving Capital Markets Day mid-term targets two years ahead of schedule.

Looking further ahead, Rolls-Royce has upgraded its 2028 targets to:

• £3.6bn-£3.9bn in underlying operating profit
• 15%-17% operating margin
• £4.2bn-£4.5bn free cash flow
• 18%-21% return on capital

Revenue grew to £17.8bn in 2024, up from £15.4bn in 2023. Operating profit jumped from £1.59bn to £2.46bn, while margins improved from 10.3% to 13.8%. Free cash flow nearly doubled year-on-year, rising from £1.29bn to £2.43bn.

Manufacturing at the heart of Rolls-Royce’s transformation

Manufacturing improvements have been central to Rolls-Royce’s success, with increased production capacity and enhanced efficiency across all core divisions.

Civil Aerospace expanded production at Derby, Dahlewitz and Singapore to meet growing demand. New engine deliveries increased and maintenance shop visits rose by 50% compared to 2023. The first Trent 1000 engine was processed at the MRO facility in Dahlewitz. 

Defence ramped up its Raynesway submarine facility to support the AUKUS programme, strengthening its ability to deliver nuclear propulsion technology. 

Power Systems is developing a next-generation engine for 2028, designed for best-in-class fuel efficiency and power density. The company expanded its joint venture in China with Yuchai, boosting its production footprint. 

A key focus has been on increasing manufacturing efficiency, reducing lead times and enhancing quality control. Investments in automation and digital manufacturing tools have improved productivity while cutting costs.

The efficiency and simplification programme has already delivered more than £350m in savings, with expectations to surpass £500m in 2025. Organisational design changes are expected to contribute £200m in annual savings, while gross third-party cost reductions exceeded £550m in 2024 and are forecasted to reach £1bn by the end of 2025.

Aerospace innovations and operational efficiency

A focus on engine durability is driving significant improvements:

• A new high-pressure turbine (HPT) blade for the Trent 1000 TEN will more than double its time on wing. Certification is expected soon, with a fleet-wide rollout over the next two years.
• Additional improvements to the Trent 1000 and Trent 7000 will extend time on wing by 30% by the end of 2025, with engine testing beginning in April.
• The Trent XWB-84 EP has been certified, offering better fuel efficiency and durability. A new coating for the Trent XWB-97 enhances performance in harsh conditions.
• A compressor blade modification for the Trent XWB-84, supported by data analytics, will extend component life.

Rolls-Royce’s share of the installed widebody engine fleet has grown from 32% in 2022 to 36% at the end of 2024, supported by a 50% market share of new engine deliveries in the past two years.

In Power Systems, a restructuring of the Power Generation business model has significantly boosted profitability, positioning Rolls-Royce to capitalise on data centre growth.

Despite persistent supply chain challenges, Rolls-Royce remains focused on securing key components and improving supplier relationships. The company’s 2025 free cash flow guidance accounts for a £150m-£200m cash impact from supply chain constraints, which are expected to persist for another 12-18 months.

With a record-breaking 2024 and an aggressive manufacturing-driven strategy, Rolls-Royce is proving its transformation is delivering real results.

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