Rolls-Royce has reported a strong set of half-year results, with underlying operating profit rising 46% to £2.5 billion as the engineering group continues to benefit from its transformation programme and operational improvements across all three of its divisions.
The company posted an underlying operating margin of 22.5%, with profitability increasing in Civil Aerospace, Defence and Power Systems. Free cash flow reached £2.0bn during the first six months of the year, supported by higher profits despite increased investment aimed at driving future growth.
Reflecting the strength of the first-half performance, Rolls-Royce has upgraded its guidance for the full year. The company now expects to deliver underlying operating profit of between £4.7bn and £4.9bn in 2026, alongside free cash flow of between £3.8bn and £4.0bn.
Chief executive Tufan Erginbilgic said the group's transformation programme continued to deliver tangible improvements in performance and resilience.
He said: “Our transformation continues to deliver, and we are demonstrating that Rolls-Royce is now a very different company to that of the past. We have unlocked new growth opportunities across the Group and created a resilient and diversified portfolio, with three strong businesses that can respond to changes in the external environment with agility and pace.”
The company highlighted progress across its operations during the first half of the year. In Civil Aerospace, Rolls-Royce said it continued to improve aftermarket profitability while effectively eliminating aircraft-on-ground issues, providing significant operational benefits for customers.
In Defence, the business strengthened its position in autonomous propulsion technologies, achieving several key milestones during the reporting period. Power Systems continued to secure growth in the data centre sector, including increasing demand for prime power solutions.
Mr Erginbilgic also pointed to the progress being made by Rolls-Royce SMR, which recently secured a win in Sweden.
“Rolls-Royce SMR has now been successful in every competitive European nuclear tender and is uniquely positioned to become a global market leader,” he said.
Rolls-Royce said its diversified portfolio and strengthened balance sheet continued to support growth, reporting net cash of £2.1bn and a total cash commitment to gross margin ratio of 0.27x.
The company also announced shareholder returns, including an interim dividend of 6.0p per share to be paid in September. In addition, it has completed £1.4bn of its planned £2.5bn share buyback programme for 2026, which forms part of a broader multi-year programme worth between £7bn and £9bn running from 2026 to 2028.
Looking ahead, Erginbilgic said the company remains confident despite wider geopolitical uncertainties.
He commented: “A strong start to the year enables us to raise our guidance for 2026 despite the conflict in the Middle East. We now expect to deliver underlying operating profit of £4.7-£4.9bn and free cash flow of £3.8-£4.0bn. This builds further confidence in our mid-term targets. The actions that we have taken and investments we have made will drive significant profitable growth to the mid-term and beyond.”