Rolls-Royce (RR) H1 2025 earnings summary

Executive summary

• Achieved strong first-half 2025 results with double-digit growth in revenue, profit, and cash flow, driven by transformation initiatives and operational improvements.

• Raised full-year 2025 guidance for operating profit and free cash flow, reflecting confidence in continued performance and mid-term targets.

• All divisions delivered improved underlying performance, with Civil Aerospace, Power Systems, and Defence showing significant progress.

• Interim dividend of 4.5p per share announced, with £0.5bn of £1bn buyback completed and total shareholder distributions of up to £1.9bn in 2025.

• Strategic progress in SMR, including selection as sole provider for UK's first small modular reactor programme and ČEZ Group investment.

Financial highlights

• Group revenue grew 13% year-over-year to £9.1bn in H1 2025.

• Operating profit rose 50% to £1.7bn, with operating margin up 4.9 percentage points to 19.1%.

• Free cash flow increased by 37% to £1.6bn, closing H1 with net cash of £1.1bn.

• Basic EPS up 76% to 15.74p (underlying); statutory EPS 52.38p.

• Return on capital employed reached 16.9% for the rolling 12 months, up 3.1pts YoY.

Outlook and guidance

• Upgraded 2025 guidance: underlying operating profit expected at £3.1–3.2bn, free cash flow at £3.0–3.2bn.

• Mid-term (2028) targets reaffirmed: £3.6–3.9bn operating profit, £4.2–4.5bn free cash flow, and 15–17% margin.

• Slightly lower H2 profit and cash flow expected due to higher OE deliveries, increased shop visits, and MRO investment.

• Guidance assumes continued supply chain challenges and low-end LTSA creditor growth.