Sky News reported on Sunday that Rolls-Royce Holdings is expected to reveal a new share repurchase initiative of up to 1.5 billion pounds when it issues its annual results later this week. The figure equates to roughly $2.02 billion using the exchange rate cited in the report.
The report noted that the announcement is anticipated to be made alongside Rolls-Royce's full-year financial results. At the time the report surfaced, it could not be immediately verified, and the company did not provide a response to a request for comment outside of normal business hours.
Rolls-Royce's most recent guidance, updated at the half-year point last July, showed the company had raised the top end of its operating profit outlook by 300 million pounds to 3.2 billion pounds. In the same update, the company increased the upper end of its free cash flow guidance by 200 million pounds to 3.1 billion pounds, according to that guidance.
The firm has precedent for repurchases around its results cycle. Around the time it reported results last year, Rolls-Royce implemented a 1 billion pound share buyback.
Context and market relevance
Share buybacks can return capital to investors and influence metrics such as earnings per share and capital allocation. The potential program reported by Sky News would be larger than the repurchase carried out last year and would represent a material deployment of capital relative to the guidance figures the company provided.
Exchange rate note
The report included an exchange rate reference of $1 = 0.7417 pounds used to express the repurchase amount in U.S. dollars.
Summary of developments
- Sky News reported a planned share buyback of up to 1.5 billion pounds to be announced with Rolls-Royce's annual results.
- At the half-year stage last July, Rolls-Royce raised its full-year operating profit guidance to a top end of 3.2 billion pounds and its free cash flow guidance to a top end of 3.1 billion pounds.
- Rolls-Royce ran a 1 billion pound buyback around the time it reported results in the prior year.
- The report could not be immediately verified and the company did not respond to a request for comment outside regular business hours.
This article presents the facts as reported and does not speculate on future outcomes or motivations beyond the information provided in those reports.