Rolls-Royce to distribute £700 in shares to all staff as it makes a recovery

02 August 2024 , 13:42

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Rolls-Royce to distribute £700 in shares to all staff as it makes a recovery

Aircraft engine maker’s share price hits record high as it restores dividend for first time in five years

Rolls-Royce intends to hand £700 worth of shares to all employees after the company reported a bounceback in its business, raised its profit forecasts and restored dividend payments to shareholders.

The aircraft engine maker’s chief executive, Tufan Erginbilgiç, told staff in an internal message on Thursday that the FTSE 100 group would give 150 shares to “every colleague, in every part of our organisation” in September, in news first reported by the Financial Times. Rolls-Royce employs 42,000 people worldwide, with about half of those staff in the UK. It is the first time the company has handed shares to employees. 

Shares in Rolls-Royce have jumped more than fivefold since Erginbilgiç took over in January 2023, as international travel rebounded after the Covid-19 pandemic. He pushed through a restructuring plan including 2,500 job cuts. He has been nicknamed “Turbo Tufan” among City analysts, impressed by the speed with which he has driven down costs.

On Thursday, the shares soared by more than 10% to a record high during trading, before closing up 7% at 481.10p, valuing the share award to each employee at more than £700. The company’s share price had dropped back a little on Friday, trading at about 474p by lunchtime.

The company raised its profit outlook on Thursday and resumed dividend payments for the first time in five years. They were suspended at the onset of the pandemic, when air traffic around the world ground to a halt.

Revenues climbed by 19% to £8.2bn in the first half of the year, helped by the post-Covid recovery in civil aerospace, while pre-tax profit almost doubled from £524m to £1bn, excluding exchange rate effects.

In his message to employees, Erginbilgiç said the resumption of the dividend payout marked an “important moment” for Rolls-Royce shareholders and future investors, many of whom “view a dividend as a prerequisite to invest” in the company.

He went on to say: “These results have been made possible thanks to your hard work and our collective actions. You are making the difference. It is therefore important that you share in our success. That is why we are giving you the opportunity to own part of Rolls-Royce.”

Elizabeth Baker