Rolls-Royce (RR) H2 2024 earnings summary

Executive summary

• Achieved strong financial and strategic progress over the past two years, transforming into a high-performing, resilient, and growing business despite ongoing supply chain challenges.

• Delivered strong financial performance in 2024, achieving CMD mid-term targets two years ahead of plan and upgrading 2028 mid-term guidance.

• Operating profit and free cash flow targets for 2025 are expected to be met two years ahead of schedule, with upgraded midterm targets for 2028.

• Balance sheet strengthened, net cash position achieved, and dividends reinstated; £1bn share buyback announced for 2025.

• Strategic initiatives and efficiency programs drove significant improvements in margins, cash flow, and return on capital.

Financial highlights

• Group revenues grew 17% to £17.8 billion in 2024, with double-digit growth across all divisions.

• Group operating profit rose over 55% to £2.5 billion; operating margin increased to 13.8%.

• Free cash flow increased by £1.1 billion to £2.4 billion; net cash position of £500 million, first since 2018.

• Return on capital improved to 13.8%.

• Profit after tax increased 78% to £2.0 billion.

Outlook and guidance

• 2025 guidance: underlying operating profit of £2.7–£2.9 billion and free cash flow of £2.7–£2.9 billion.

• Upgraded 2028 midterm targets: operating profit of £3.6–£3.9 billion, margin of 15–17%, and free cash flow of £4.2–£4.5 billion.

• Expect continued LTSA balance growth, higher normalized engine flying hour rates, and return on capital of 18–21% in the midterm.

• Long-term growth prospects supported by new business opportunities in SMR, UltraFan, and defence contracts.