Rolls-Royce (LSE:RR.) has revised its full-year profit expectations upward following a robust first half marked by a nearly £1 billion increase in revenue. The engineering giant, listed on the FTSE 100, continues to benefit from its ongoing transformation efforts.
For the six months ending in June, Rolls-Royce reported an underlying pre-tax profit of £1.68 billion, significantly higher than the £1.03 billion recorded during the same period in 2024. The company, headquartered in Derby, also posted a 50% rise in underlying operating profit, which grew from £1.14 billion to £1.73 billion.
According to statutory metrics, revenue climbed to £9.49 billion from £8.86 billion, operating profit rose from £1.64 billion to £2.07 billion, and pre-tax profit soared from £1.41 billion to £4.84 billion. Underlying revenue for the period reached £9.05 billion, up from £8.18 billion a year ago.
On the back of this strong performance, Rolls-Royce updated its 2025 outlook, projecting an underlying operating profit between £3.1 billion and £3.2 billion, and free cash flow of £3 billion to £3.1 billion.
Navigating Global Headwinds
Despite ongoing issues with supply chains and tariff impacts, the company credited its multi-year overhaul for driving improved performance.
“Our multi-year transformation continues to deliver,” said CEO Tufan Erginbilgic. “Our actions led to strong first half year results, despite the challenges of the supply chain and tariffs. We are continuing to expand the earnings and cash potential of Rolls-Royce. We delivered continued strong operational and strategic progress in the first half of 2025. In civil aerospace, we achieved significant time on wing milestones and delivered improved aftermarket profitability. In power systems, where we now see further growth potential, we continued to capture profitable growth across data centres and governmental.”
The company characterized the start of 2025 as a period of “strong strategic delivery,” noting marked improvement in key financial metrics compared to the prior year.
“The first half of 2025 has been another period of strong strategic delivery, with significant year on year improvement across all key financial metrics. Driving this improvement were our strategic initiatives, including commercial optimisation and cost efficiency benefits. Strong financial performance was achieved despite an uncertain external environment, including continued supply chain challenges and tariffs. We expect to fully offset the impact of the announced tariffs through the mitigating actions we are taking. We are closely monitoring the potential indirect impact on economic growth, foreign exchange rates, and inflation and we will continue to take the necessary actions. We have seen some improvement in the supply chain, notably the availability of finished parts, helped by our actions, although we continue to see inflationary pressure in product costs,” Rolls-Royce stated.
Record Share Price and Return of Dividends
The company’s share price surpassed the £10 threshold for the first time in July, marking a dramatic recovery from its pandemic-era lows. Since September 2024, the stock has more than doubled in value, shrugging off dips such as the one following tariff announcements by former U.S. President Donald Trump in April.
In a major development for its energy business, Rolls-Royce SMR—its small modular reactor joint venture with Czech energy firm CEZ—won the UK government’s Great British Nuclear (GBN) competition. The group will now construct three units domestically, a move expected to “generate employment, boost the supply chain and generate economic growth, including through the capture of significant export opportunities.” CEO Erginbilgic has said he expects this segment to be profitable and cash flow positive by the end of the decade.
Earlier in the year, the company reinstated its dividend and announced a £1 billion share buyback scheme after beating full-year expectations. Investors were offered a 6 pence per share dividend—the first since before the Covid-19 crisis—and the buyback is scheduled to run through the end of 2025.
Rolls-Royce finished 2024 with an underlying profit of £2.5 billion, comfortably exceeding forecasts of £2.1 billion to £2.3 billion. Revenue came in at £17.8 billion, also ahead of analysts’ expectations of £17.3 billion.
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