Let’s talk about Rolls-Royce—not just because of defense contracts, but because this company has fundamentally transformed and remains a key part of European infrastructure.
**Massive Transformation & Strong Growth**
Rolls-Royce has made significant progress in expanding its earnings and cash flow potential. The numbers speak for themselves:
* **£2.5bn underlying operating profit** with a **13.8% margin**, thanks to strategic initiatives, commercial optimization, and cost efficiencies.
* **£2.4bn free cash flow**, driven by strong operating profit and continued LTSA (long-term service agreement) balance growth.
* A net **cash balance of £475m** at the end of 2024.
**Shareholder Returns & 2025 Outlook**
* A **6.0p per share dividend** (30% payout ratio of underlying profit after tax).
* **2025 guidance:** £2.7bn-£2.9bn operating profit and **£2.7bn-£2.9bn free cash flow**, achieving mid-term targets two years early.
* **£1bn share buyback** starting now, completing through 2025.
**Long-Term Growth Targets (2028)**
* **£3.6bn-£3.9bn underlying operating profit**.
* **15%-17% operating margin**.
* **£4.2bn-£4.5bn free cash flow**.
* **18%-21% return on capital**.
With these numbers, it's clear Rolls-Royce isn’t just riding on defense contracts. Their civil aerospace and power systems businesses are driving serious value, making them a cornerstone of European infrastructure.
🔗 [Rolls-Royce Full-Year Results 2024](https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/investors/results/2024-full-year-results/rr-plc-holdings-2024-full-year-results-press-release.pdf)
What’s your take?
I just love this company and hope they get more recognition :)