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Shares of Rolls-Royce surged on Thursday after it hit profit targets two years ahead of schedule in its annual results.

Revenue climbed almost 16% to £17.8 billion ($22.6 billion) in 2024, beating analyst estimates of £17.3 billion.

The British company, which makes engines for commercial and military aircraft, reported a 57% rise in operating profit to £2.5 billion last year.

Stock rose almost 20% to a record high in morning trading in London, valuing Rolls-Royce at £64 billion. Shares have soared by 110% over the past 12 months.

The company, which also builds ship propulsion and power-generation systems, also said it would start buying back shares worth £1 billion.

After struggling in recent years, Rolls-Royce has undergone a major turnaround since 2023.

Rolls' share of the market for engines installed on widebody commercial aircraft rose from 32% at the end of 2022 to 36% at the end of last year, with more than half the market for new engine deliveries over the past two years.

All three of its divisions are "making significant strides," said Richard Hunter, head of markets at Interactive Investor. That produced a "headline set of numbers which should keep investors' interest on high alert," he added.

Last month Rolls-Royce said it had signed the biggest contract with the UK Ministry of Defence in its history. The eight-year Unity contract is worth £9 billion and covers all elements of design, manufacture and support of the nuclear reactors powering the Royal Navy's submarine fleet.

On the back of the strong performance, Rolls-Royce has upgraded its mid-term targets for operating profit and cash flow. The group now foresees operating profit of £3.6 billion to £3.9 billion and free cash flow of between £4.2bn and £4.5 billion by 2028.

"All core divisions delivered significantly improved performance, despite a supply chain environment that remains challenging," CEO Tufan Erginbilgic said in a statement.

"We are moving with pace and intensity. Based on our 2025 guidance, we now expect to deliver underlying operating profit and free cash flow within the target ranges set at our capital markets day, two years earlier than planned."

Analysts at UBS said in a note that forward guidance was strong, and "the strength appears broad-based across the business."