Rolls-Royce Holdings shares continued to strengthen on a news report that it plans to buy back up to £1.5 billion (US$2.03 billion) in shares.
The aerospace and defence engineering company will disclose these plans when it reports record profits this week, according to a Sky News report.
“I’ve learnt that Rolls-Royce is expected to announce alongside its annual results on Thursday that it will launch a fresh share buyback worth as much as £1.5bn,” Sky News City Editor Mark Kleinman wrote.
“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.”
Rolls-Royce shares (LON: RR) closed 22.50 pence (1.70%) higher at £13.47 on Friday, capitalising the company at £113.49 billion.
The shares have more than doubled over the last 12 months and increased by more than 1,150% over the last five years in a stunning turnaround from its position during the COVID-19 pandemic, when its survival was under threat.
The performance has been transformed by former BP executive Tufan Erginbilgic, the Chief Executive.
Last year, Rolls-Royce announced a £1bn buyback, its first since 2014 when it had surplus cash from selling its energy business to Siemens.
The buyback was stopped in 2015 by Chief Executive Warren East, who was worried about the company’s balance sheet.
Rolls-Royce upgraded its full-year profit guidance last July.
Rolls-Royce Holdings is unrelated to Rolls-Royce Motor Cars, a luxury automobile manufacturer owned by BMW since 1998.
The original company, founded in 1906 in the United Kingdom by Charles Rolls and Henry Royce, was split in 1971 amid financial problems.
