LONDON (Reuters) -Aerospace engineer Rolls-Royce said it would restart dividend payments when it reports 2024 results next year after it raised its guidance for operating profit and free cash flow by as much as 300 million pounds on Thursday after a strong first half.

The British company increased its forecast for 2024 underlying operating profit to between 2.1 billion pounds and 2.3 billion pounds ($2.70-2.95 billion) and free cash flow to between 2.1 billion pounds and 2.2 billion pounds.

Chief Executive Tufan Erginbilgic said his transformation of the company was proceeding with "pace and intensity".

"We are expanding the earnings and cash potential of the business in a challenging supply chain environment, which we are proactively managing," he said.

"These results and our increased financial resilience give us the confidence to raise our 2024 guidance and reinstate shareholder distributions in respect of the full year 2024 results."

The company had axed its dividend in 2020 during the pandemic when most commercial flying stopped, cutting off a large chunk of its income.

Rolls reported underlying operating profit of 1.15 billion pounds for the first half, up from 673 million pounds a year earlier, as it improved its margin by 4.3 percentage points to 14.0%.

($1 = 0.7788 pounds)