Rolls-Royce profit forecast increased after a 50% jump in first-half operating profit underscores the impact of a transformation plan by the engine maker under chief executive Tufan Erginbilgic. Rolls-Royce Holdings PLC (LSE:RR.) now anticipates better full-year 2025 results as it carries its momentum forward.
The business registered an underlying operating profit that more than doubled to £1.73 billion in the first six months of 2025 compared to £1.15 billion a year earlier. This growth in profitability was supported by previous underlying revenue growth of 10.8% to £9.06b but also a higher operating margins of 19.1%, compared to 14.0% in 2024.
Free cash flow also rose to £1.58 billion, from £1.2 billion a year earlier, for higher profitability and a rise in long-term service agreement balances. This partly explained a big turnaround in net cash, at £1.08bn half-way (£475m at end 2024).
In conjunction with this solid financial performance, Rolls-Royce announced an interim dividend of 4.5p a share and delivered £0.40 billion of its previously announced £1.00 billion share buyback programme.
Thanks to those strong first half numbers, the Rolls-Royce profit guidance for the full year has been upgraded further. The company now forecasts full-year underlying operating profit to fall between £3.1 billion and £3.2 billion, compared with its previous forecast range of £2.7 billion to £2.9 billion. Free cash flow for the full year, too, was guided at £3 billion to £3.1 billion, against £2.7 billion to £2.9 billion.
“Our multi-year transformation continues to deliver,” chief executive Tufan Erginbilgic said. Our actions resulted in solid first half year results, despite the issues with the supply chain and tariffs.”
The company also warns that second-half operating profit should be marginally lower because of greater investment in Civil Aerospace and reduced benefits from net contractual margin improvements.
Even with this anticipated H2 slowdown, the company remains optimistic about its mid-term prospects. The company’s mid-term guidance remains between £3.6 billion and £3.9 billion for an underlying operating profit, and between £4.2 billion and £4.5 billion for free cash flow.
Hess’s foray into sustainability is covers more than just setting targets according to Erginbilgic: “We see these targets as a milestone, not a destination, with significant growth opportunities beyond the mid-term.”
Investec says the increased Rolls-Royce profit guidance reinforces investor confidence and evidencces continued strategic benefits of the transformation strategy.
