Rolls-Royce Holdings PLC has upgraded its medium-term targets and unveiled plans to return up to £9 billion to shareholders after reporting another sharp jump in profits and cash flow.
The FTSE 100 engine maker posted final results showing underlying operating profit jumped 40% to £3.5 billion in 2025, as operating margins improved to 17.3% from 13.8% and revenue increased 13% to £20.1 billion.
The company said an expansion of large-engine flying hours, stronger aftermarket performance and improved commercial terms supported the improvement.
Free cash flow climbed to £3.3 billion from £2.4 billion to increase the net cash pile at year-end to £1.9 billion, up from £475 million a year earlier.
Revenue, profit and cash flow were all above company-compiled consensus forecasts.
Chief executive Tufan Erginbilgic said: "Our transformation continues with pace and intensity. We are consistently achieving outcomes that were not possible before our transformation."
He added: "With a strong balance sheet, significant investment to support our long-term growth, and confidence in the future, we are announcing a £7-£9 billion share buyback for 2026-2028 with £2.5 billion to be completed this year."
After completing a £1 billion buyback in 2025, the £2.5 billion buyback in 2026 included £200 million already bought back between 2 January and 20 February 2026.
On top of that, a final dividend of 5p per share was declared, taking the total payout for 2025 to 9.5p, up from 6p.
Looking ahead, Rolls's new outlook is for underlying operating profit to increase 12-14% to £4-4.2 billion this year, with free cash flow of £3.6-3.8 billion.
Management also upgraded medium term targets out to 2028, now expecting underlying operating profit of £4.9-5.2 billion, compared with previous guidance of £3.6-3.9 billion. Free cash flow is now seen at £5-5.3 billion, up from £4.2-4.5 billion before.