Rolls-Royce stock jumps after boost to profit forecast, plan for $1.3 billion share buyback.

Britain’s Rolls-Royce (RYCEY, RR.L) has lifted its mid-term targets to reflect confidence in future profit growth as its plan to improve engine performance and lower costs gains traction, helping it beat expectations last year.

The upgrade on Thursday showed the progress made by Rolls-Royce over the last two years after former BP executive Tufan Erginbilgic took over as CEO, describing the company as a burning platform which was in need of a fundamental turnaround.

Shares of Rolls-Royce jumped as much as 16% in London to touch an all-time high. The group also announced a dividend of 6 pence per share, having flagged last August that it would reinstate the payout after a five year pandemic break, and launched a 1 billion pound ($1.27 billion) share buyback.

The company, which also powers ships, submarines and makes power generation systems, said it would meet its previous mid-term targets this year, two years earlier than planned, and as such was now guiding to mid-term underlying operating profit of 3.6 billion pounds to 3.9 billion pounds.

Profit for this year is expected to come in at between 2.7 billion pounds and 2.9 billion pounds, Rolls said, and compared to the 2.46 billion pounds it posted last year, comfortably ahead of a consensus forecast, and up 55% on last year.

Source: FINANCE.YAHOO