Rolls-Royce Raises Financial Targets and Unveils Major Shareholder Returns

Rolls-Royce reports £3.5bn profit, £3.3bn cash flow, and launches a £7-9bn share buyback. It raises 2026-2028 financial targets on strong Civil Aerospace recovery.

Rolls-Royce has delivered a powerful set of results, prompting the company to significantly upgrade its financial outlook. The engineering group announced substantially higher profits, a surge in cash generation, and a multi-billion pound share buyback program, signaling strong confidence in its ongoing transformation.

Share Price Reaches New Peak on Robust Results

Investors responded positively to the news, pushing the share price to a new 52-week high of €15.92. This market movement reflects approval of the company's current performance and its ambitious plans for the coming years.

The underlying operational story is one of broad-based strength. For the past financial year, Rolls-Royce reported an underlying operating profit of £3.5 billion. Group revenue climbed to £20.1 billion, with growth recorded across all three major divisions: Civil Aerospace, Defence, and Power Systems.

Crucially, this operational success translated into a much stronger financial position. Free cash flow surged to £3.3 billion, while the net cash position improved to £1.9 billion. The company's pre-tax profit also saw a significant increase, rising to £6.94 billion.

Operational Momentum Driven by Key Divisions

A primary engine for growth has been the Civil Aerospace unit. The division's Engine Flying Hours (EFH) have now recovered to 111% of 2019 levels. This increased activity in the skies directly fuels higher-margin service and maintenance revenue.

The Defence business reported consistently robust demand and cited "major orders" secured throughout the year. Meanwhile, the Power Systems division achieved a marked improvement in its profitability. This performance across the board suggests the company's recovery is built on a solid operational foundation, not one-off factors.

Enhanced Capital Return and Upgraded Financial Guidance

In a clear move to return value to shareholders, Rolls-Royce unveiled an extensive capital return program. The board has approved a share buyback plan totaling £7 to £9 billion, to be executed between 2026 and 2028. An initial tranche of £2.5 billion is scheduled for completion in 2026.

Additionally, the company has proposed a final dividend of 5.0 pence per share. This would bring the total dividend for the year to 9.5 pence, representing an increase of 58% compared to the prior year.

Concurrently, management has raised its medium-term financial targets. For 2026, Rolls-Royce now aims for an underlying operating profit in the range of £4.0 to £4.2 billion. Looking further ahead to 2028, the goal is to achieve an underlying operating profit of £4.9 to £5.2 billion, supported by an expected free cash flow of £5.0 to £5.3 billion.

The overarching message is unambiguous: Rolls-Royce intends to not only sustain its current operational momentum but to formally underpin it with more ambitious goals and a multi-year capital return framework. The year 2026 stands as the first major milestone, with its targeted profit range and the execution of the initial £2.5 billion share repurchase.