Value of Rolls-Royce hits £100BN for the first time

The value of Rolls-Royce hit £100billion for the first time in its 121-year history yesterday in what has been dubbed ‘one of the most remarkable turnarounds in British industrial history’. Shares in the engineering giant rose as high as 1190p – taking gains for the year to nearly 110 per cent and giving it a value of £100.3billion.

Analysts at Goldman Sachs believe the shares will rise as high as 1290p – valuing the company at almost £109billion. The stock has staged a dramatic rally since Tufan Erginbilgic took over as chief executive at the start of 2023 with the shares priced at 93.2p each. Back then, it was worth just £7.9billion and he described the company as a ‘burning platform’ that had been ‘grossly mismanaged’.

The shares are up nearly 1,200 per cent on his watch – or almost 13-fold – turning Rolls-Royce into the fifth biggest company on the FTSE 100 index behind HSBC at number one followed by AstraZeneca, Shell and Unilever. An investor who bought £1,000 of shares when Erginbilgic took over would now be sitting on more than £12,700. Richard Hunter, head of markets at Interactive Investor, described it as ‘an extraordinary corporate turnaround’.

He said: ‘The burning platform has long been extinguished, propelling Rolls-Royce to a group which is now firing on all cylinders.’ Erginbilgic – a former BP executive dubbed ‘Turbo’ Tufan in the City because of the speed at which he works – has been credited with transforming Rolls-Royce since taking over. The company was in dire straits in the wake of the pandemic, which halted international travel, choking off demand for new plane engines or repairs. It described the period as its ‘darkest hour’ since it was forced into liquidation in the 1970s. On taking the helm, Erginbilgic vowed to quadruple the company’s profits by 2027 and embarked on a cost-cutting drive that saw 2,500 staff axed in his first year.

Rolls-Royce, which makes and services engines for commercial airlines including Boeing and Airbus, has benefited from the post-pandemic rebound in international travel. The firm, which also makes engines for fighter jets including the Eurofighter Typhoon and F35 as well as nuclear reactors to power Royal Navy submarines, has been given a further boost by increased defence spending as Europe races to rearm in the face of Russian aggression. And it is now at the forefront of Britain’s drive to build mini nuclear power plants. Of the 18 analysts that cover the stock, four rate it as a ‘strong buy’ while nine say ‘buy’ and four say ‘hold’. Only one analyst recommends investors sell the shares.

Garry White, chief investment commentator at wealth manager Charles Stanley, details Rolls’ remarkable turnaround: ‘In under three years, Rolls-Royce has pulled off one of the most remarkable corporate turnarounds in modern British industrial history – a story that reads more like a Hollywood screenplay than a balance sheet. ‘When Tufan Erginbilgiç took over as chief executive in early 2023, he famously described the company as a ‘burning platform’.

‘The turbine maker was still reeling from the pandemic, its core civil aerospace business devastated by the collapse in global air travel. With airlines grounding fleets and cancelling orders, Rolls-Royce’s ‘power-by-the-hour’ model – where revenue is tied to engine usage – saw income plunge, exposing its high fixed-cost base and triggering a wave of losses, emergency fundraising, and collapsing investor confidence. ‘Mr Erginbilgiç, dubbed ‘Turbo Tufan’ in City circles due to his successful track record of ‘turbocharging’ and revitalising struggling companies, responded with a sweeping overhaul: aggressive cost-cutting, zero-based budgeting, and a cultural reset focused on performance, pace, and purpose. The results have been dramatic.

‘Looking ahead, the company is now betting on growth in data centre power systems and its nuclear ambitions, including the UK’s first Small Modular Reactor programme, which is expected to be cash-flow positive by 2030. ‘While legacy engine issues and supply chain pressures remain, investor sentiment has flipped. Rolls-Royce is once again flying high – turbocharged by a leader who transformed crisis into comeback with aplomb.’