Rolls-Royce (RR) H2 2025 earnings summary

Executive summary

• Achieved record financial and operational performance in 2025, with all divisions contributing to growth and upgraded midterm targets for 2028.

• Transformation efforts delivered a step change in profitability, efficiency, and resilience.

• Announced a GBP 7–9 billion multi-year share buyback program for 2026–2028, the first in company history.

Financial highlights

• Group revenues grew 14% to GBP 20.1 billion, with operating profit up 40% to GBP 3.5 billion compared to 2024.

• Operating margin increased by 3.2 percentage points to 17.3%.

• Free cash flow rose by GBP 845 million to GBP 3.3 billion; net cash position at GBP 1.9 billion.

• Return on capital reached 18.9%, nearly 4x higher than in 2022.

• Basic EPS up 46% to 29.55p; full-year dividend increased 58% to 9.5p per share.

Outlook and guidance

• 2026 guidance: underlying operating profit of GBP 4–4.2 billion and free cash flow of GBP 3.6–3.8 billion.

• Upgraded 2028 midterm targets: operating profit of GBP 4.9–5.2 billion, margin of 18–20%, free cash flow of GBP 5–5.3 billion, and return on capital of 23–26%.

• Civil Aerospace engine flying hours expected at 115–120% of 2019 levels in 2026.

• Majority of LTSA contract cash benefits and OE renegotiation value to be realized beyond 2028.