engine maker boosts profit outlook
Rolls-Royce It expects profits of more than £4 billion ($5.42 billion) this year as the aerospace engine and power systems maker finishes another year of strong growth, it said on Thursday.
The aerospace giant is targeting underlying operating profits of between £4bn and £4.2bn in 2026, above the £3.65bn midpoint expected by analysts surveyed by FactSet. Free cash flow is expected to be between £3.6bn and £3.8bn this year, again above expectations.
It also announced that £2.5bn of share buybacks would be completed this year as part of a £7bn to £9bn ($12bn) multi-year buyback programme, citing a strong balance sheet.
Shares rose 6.4% in early trading Thursday, heading toward a record high.
CEO Tufan Erginbilgic said that based on the bullish outlook, the company now expects to turn a profit two years earlier than planned in the previous medium-term guidance range.
“Our transformation continues with speed and intensity,” he said in the statement.
The British company has raised its 2028 targets for underlying operating profit of £4.9bn to £5.2bn, operating margins in the range of 18% to 20% and free cash flow of £5bn to £5.3bn.
Rolls-Royce’s shares have fallen over the past few years due to growth in its three business segments: civil aviation, defense and energy systems. Over the past 12 months, the stock has more than doubled as the company has grown thanks to the transformation plan initiated by Erginbilgic, which has increased investors’ confidence.
Rolls-Royce shares are up over 100% in the past year.
In 2025, underlying operating profit rose over 40% to £3.46bn, beating FactSet’s forecast of £3.32bn. Underlying revenue for the year rose 12% to £20.1bn.
The quarterly hit-and-raise report was described as a “high-quality release” by Jefferies analyst Chloe Lemarie, who also noted profits were driven by the power systems business.
Benefitting from the mass construction of data centers based on Rolls-Royce’s power generation system, the unit generated revenues of £4.89bn in 2025, reflecting annual organic growth of 19%.
While the civil aviation business, which sells engines to Boeing and Airbus, grew by 15 percent compared to last year, defense grew by 8 percent.
