rolls royce The aero engine and power systems maker is promising another year of strong growth, announcing on Thursday that it expects to make more than 4 billion pounds ($5.42 billion) in profits this year.
The aerospace giant is targeting underlying operating profits of between 4 billion pounds and 4.2 billion pounds in 2026, above the midpoint of analyst estimates compiled by FactSet of 3.65 billion pounds. It expects free cash flow to be between £3.6bn and £3.8bn this year, also better than expected.
It also announced that a £2.5 billion share buyback would be completed this year, more than previously suggested in media reports, as part of a multi-year share buyback program of £7 billion to £9 billion ($12 billion) between 2026 and 2028.
Shares rose as much as 7% in early trading Thursday. The stock had recently risen 4.5% and had hit new highs multiple times this year, putting it on track for an all-time high.
CEO Tufan Erginbilgić said that based on the bullish outlook, the company expects to achieve profits two years earlier than planned and within the previous medium-term guidance.
“Our transformation continues with pace and momentum,” he said in a statement.
The British company has raised its 2028 targets to underlying operating profit of 4.9 billion to 5.2 billion pounds, operating margin of 18% to 20%, and free cash flow of 5.0 billion to 5.3 billion pounds. Erginbilgic said he expects his company to benefit from AI, energy transition and increased defense spending in the medium term and beyond.
Rolls-Royce’s share price has fallen in recent years as all three of its businesses – civil aerospace, defense and power systems – have grown. The stock has more than doubled in the past 12 months as the company has grown amid a transformation plan laid out by Ergin Birgic and strengthened investor confidence. The plan includes cost reduction and prioritization of core businesses.
Rolls-Royce’s share price has risen more than 100% in the past year.
Underlying operating profit in 2025 surged more than 40% to a record £3.46bn, beating FactSet’s forecast of £3.32bn. Underlying revenue for the year rose 12% to £20.1bn.
This is the fourth consecutive year that the company has exceeded its profit forecasts.
Jefferies analyst Chloe Lemarie called Beat & Raise’s quarterly report a “high-quality release,” noting that the profit was driven by its power systems business.
The division, which is benefiting from the mass construction of data centers that rely on Rolls-Royce power generation systems, generated revenues of £4.89 billion in 2025, reflecting 19% year-on-year internal growth.
Civil Aerospace, the largest revenue and profit driver, sells engines to: boeing and airbus Among other things, it grew by 15% compared to last year. Defense units increased by 8%.
Rolls-Royce is one of the four major aero engine manufacturers in the world. RTX Subsidiaries Pratt & Whitney, CFM International, and GE Aerospace.
Chief Executive Officer Ergin Bilgic on Thursday highlighted the possibility of the company returning to supplying narrow-body aircraft with engines. Rolls-Royce currently makes engines for wide-body aircraft such as Boeing Co.’s Boeing 787 Dreamliner and Airbus A330 Neojet.
This comes amid an engine crunch for aircraft manufacturers, which are struggling to secure enough engines to meet delivery targets.
“We are in an unsatisfactory situation where we have fewer engines than we need,” Airbus CEO Guillaume Faury told CNBC last week, referring to a dispute with the airline’s main engine supplier Pratt & Whitney over 2026 engine deliveries.
