Company raises profit outlook to £5.2 billion by 2028 and announces £9 billion shareholder returns
Shares in Rolls-Royce Holdings PLC (LSE:RR.), the FTSE 100 jet engine maker, rose 6% to 1,393p after the company sharply upgraded its medium-term financial targets and unveiled plans to return up to £9 billion to shareholders.
Management now expects underlying operating profit of £4.9 billion to £5.2 billion by 2028, up from previous guidance of £3.6 billion to £3.9 billion, with free cash flow seen at £5 billion to £5.3 billion against a prior range of £4.2 billion to £4.5 billion.
The upgraded outlook followed another strong set of annual results, with underlying operating profit jumping 40% to £3.5 billion in 2025 as operating margins improved to 17.3% from 13.8%.
Revenue rose 13% to £20.1 billion and free cash flow climbed to £3.3 billion from £2.4 billion, all beating consensus forecasts.
The company said an expansion of large-engine flying hours, stronger aftermarket performance and improved commercial terms supported the improvement.
Rolls-Royce announced a share buyback programme of £7 billion to £9 billion over 2026 to 2028, with £2.5 billion to be completed this year, following the completion of a £1 billion buyback in 2025.
A final dividend of 5p a share took the total 2025 payout to 9.5p, up from 6p.
Chief executive Tufan Erginbilgic said: "With a strong balance sheet, significant investment to support our long-term growth, and confidence in the future, we are announcing a £7 billion to £9 billion share buyback for 2026 to 2028."
For the current year, Rolls-Royce guided for underlying operating profit of £4 billion to £4.2 billion, with free cash flow of £3.6 billion to £3.8 billion.