Rolls-Royce Holdings plc reported a 40% rise in annual profit, driven by strong performance in its aero-engine division. The company also upgraded its medium-term financial targets and increased planned returns to shareholders.
For 2025, Rolls-Royce posted underlying operating profit of £3.46 billion, exceeding the £3.27 billion consensus estimate. The company achieved an operating margin of 17.3%, reflecting improved efficiency and sustained demand. Free cash flow reached £3.3 billion, supported by solid operational execution and continued expansion in long-term service agreement balances. As of December 31, 2025, Rolls-Royce reported a net cash position of £1.9 billion.
Looking ahead to 2026, the group expects underlying operating profit to range between £4.0 billion and £4.2 billion. Free cash flow is projected at £3.6 billion to £3.8 billion, signaling continued earnings momentum and cash generation strength.
Over the medium term, Rolls-Royce significantly raised its targets. The company now aims for underlying operating profit of £4.9 billion to £5.2 billion, compared with its previous guidance of £3.6 billion to £3.9 billion. It also lifted its operating margin target to 18%–20%, up from the earlier 15%–17% range.
Free cash flow expectations were upgraded to £5.0 billion to £5.3 billion, compared with the prior forecast of £4.2 billion to £4.5 billion. In addition, the company increased its return on capital target to 23%–26%, up from 18%–21% previously.
To enhance shareholder returns, Rolls-Royce announced plans for a £7 billion to £9 billion share buyback programme covering the 2026–2028 period, with £2.5 billion scheduled to be completed this year. The company also declared a final dividend of 5 pence per share, reinforcing confidence in its financial outlook and cash generation capacity.
