Rolls-Royce to unveil up to £1.5bn buyback with results this week - report

(Sharecast News) - Engine maker Rolls-Royce will reportedly unveil plans this week to return more than £1bn to investors when it reports record profits and underlines the spectacular scale of its turnaround. According to Sky News, the company is expected to announce alongside its annual results on Thursday that it will launch a fresh share buyback worth as much as £1.5bn.

The capital return, which will come on top of the company's final dividend, will reinforce the size of Rolls-Royce's free cashflow at a company that during the Covid pandemic had genuine fears for its survival.

Under chief executive Tufan Erginbilgic, the former BP executive, Rolls-Royce's performance and valuation have been transformed. It now has a market value of over £112bn, with the shares having more than doubled in the last year.

This time last year, Rolls-Royce announced a £1bn buyback, its first since 2014, when it had surplus cash after selling its energy business to Siemens. The buyback was halted in 2015 by then chief executive Warren East, amid growing concerns about the balance sheet.

Rolls-Royce upgraded its full-year profit guidance at the half-year stage last July, with underlying operating profit now expected to come in between £3.1bn and £3.2bn.

Helen McCabe, the company's chief financial officer, said last summer: "In relation to capital frame and buyback, we've always been quite consistent around how we look to strike that balance between ensuring that we protect that balance sheet and then being very thoughtful about how we drive for additional investment, be that organic or inorganic or additional shareholder returns.

"And we've been clear that buybacks are in our tool kit."

Sky News revealed last month that Erginbilgic was in line for a multimillion pound annual pay rise as part of an overhaul of Rolls-Royce's remuneration policy.