Rolls-Royce says, subject to completion of Siemens deal in November, it will buy back £1bn of its own shares
Rolls-Royce has agreed to sell its gas turbine operation to Siemens for £785m
Rolls-Royce has announced it will return £1bn to its shareholders to give them the proceeds from the sale of its energy turbine business.
The company agreed in May to sell its gas turbine operation to Siemens of Germany for £785m. Rolls-Royce said that, subject to expected completion of the deal in November, it would buy back £1bn of its own shares to increase returns to investors.
John Rishton, chief executive of Rolls-Royce, said: "As no material acquisitions are planned, and reflecting the strength of our balance sheet, we will return the proceeds of the energy sale to our shareholders."
The company's shares rose 6.7% to £10.78 and were the biggest gainers in the FTSE 100 index.
Before a presentation to investors on Thursday, Rolls-Royce said it expected its results to meet City expectations for this year and next year. Capital spending is heading towards 4% of revenue for the next three to five years, down from 4.9% at the end of 2013.
The sale of the sub-scale energy turbine business was a bright spot in a rocky early 2014 for the world's second biggest aircraft engine maker.
Rolls-Royce shocked shareholders in February by announcing that a decade of revenue growth would come to an end this year. In May it blamed the strength of the pound and the one-off cost of fixing a product problem for an expected £70m reduction in full-year profit.
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