The company has established itself as a key supplier of engines for aircraft and submarines
A general view of the Rolls Royce Inchinan factory
Engine maker Rolls-Royce has raised its full-year outlook after reporting a 46 per cent leap in operating profit for the first half amid increased demand from defence and an improved performance in the civil after market.
On Thursday, the company said it expected to deliver underlying operating profit of between £4.7bn and £4.9bn for the financial year – up from a previous estimate of £4bn and £4.2bn.
Shares in the company rose by four per cent in early trading on the back of the results.
“The actions that we have taken and investments we have made will drive significant profitable growth to the mid-term and beyond,” said chief executive Tufan Erginbilgic.
“A strong start to the year enables us to raise our guidance for 2026 despite the conflict in the Middle East.”
Elsewhere, the manufacturer said it had completed £1.4bn of a planned £2.5bn share buyback scheme for 2026. It also announce an interim dividend of 6p per share would be paid in September.
“Our transformation continues to deliver, and we are demonstrating that Rolls-Royce is now a very different company to that of the past,” added Mr Erginbilgic.
“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.”
Rolls-Royce has established itself as a key supplier of engines for aircraft, submarines and other power systems, with its technology earmarked for Dreadnought – the Royal Navy’s upcoming fleet of four nuclear-powered ballistic missile submarines.
Last week, the company announced plans to build a huge new defence research and manufacturing hub in Filton near Bristol.
The £100m facility, at Gypsy Patch Lane, will be used to design, assemble and test engines for the defence industry, and to develop new products for future air combat.
Rolls-Royce stocks have enjoyed a rebound in recent months, and have risen by around 40 per cent in the last year.
Last week, shares in the engine maker enjoyed a surge amid the appointment of former defence minister John Healey as Chancellor.
“Shareholders couldn’t have hoped for a better turnaround since the appointment of CEO Tufan Erginbilgic at the start of 2023,” said Victoria Scholar, head of investment at Interactive Investor.
“The stock has enjoyed a meteoric ascent and confidence in the company has skyrocketed. The company is returning cash to shareholders too through its share buyback announced in February. No longer a burning platform, Rolls-Royce is firing on all cylinders.”
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