Rolls-Royce Holdings PLC (LSE:RR.) gave an upwards tweak to its full-year outlook after reporting a 50% increase in underlying operating profit in the first half, driven by the ongoing transformation under chief executive Tufan Erginbilgic.
Underlying operating profit for the engine maker jumped to £1.73 billion in the first six months of 2025 from £1.15 billion a year earlier, as revenue rose 10.8% to £9.06 billion on an underlying basis and margins increased to 19.1% from 14.0%.
Free cash flow improved to £1.58 billion, from £1.2 billion a year ago, supported by higher profits and growth in long-term service agreement balances. This left net cash at £1.08 billion at the half-year period, up from £475 million at year-end.
An interim dividend of 4.5p per share was declared, with £0.40 billion of a planned £1.00 billion share buyback completed in the period.
For the full year, underlying operating profit is now expected to be between £3.1 billion and £3.2 billion, up from the £2.7-2.9 billion previous guidance, while free cash flow is seen coming in at £3-3.1 billion, also up from £2.7-2.9 billion.
"Our multi-year transformation continues to deliver," said Erginbilgic. "Our actions led to strong first half year results, despite the challenges of the supply chain and tariffs.".
He noted that second-half operating profit is expected to be slightly lower than the first due to increased investment in Civil Aerospace and a reduced contribution from net contractual margin improvements.
The performance in the period "builds further conviction in our mid-term targets," he said, which include underlying operating profit of £3.6-3.9 billion and free cash flow of £4.2-4.5 billion.
"We see these targets as a milestone, not a destination, with substantial growth prospects beyond the mid-term."