Rolls-Royce increased its full-year financial targets following robust first-half performance driven by strength in civil aerospace, defense, and power systems divisions. The British engineering company reported underlying operating profit of £2.5 billion for the first six months of the year, representing a 46% increase from the prior-year period, with revenue climbing over 24% to £11.3 billion.
The company raised its full-year underlying operating profit guidance to a range of £4.7 billion to £4.9 billion, compared with the previous outlook of £4 billion to £4.2 billion. Free cash flow expectations also improved, with the company now projecting £3.8 billion to £4 billion versus the prior guidance of £3.6 billion to £3.8 billion. The stock gained as much as 6% in response, settling at a 4% advance.
Chief Financial Officer Helen McCabe attributed significant momentum to the data center power business, where orders surged more than 50% in the first half as operators sought backup and on-site power solutions amid grid constraints. The executive emphasized growing prospects from heightened defense spending, citing long-term commitments under the U.K.’s defense investment plan and NATO’s increased military investment push.
McCabe stated the company had maintained positive initial conversations with the new U.K. government and expressed support for its emphasis on growth, defense, and industrial manufacturing advancement. She noted that the defense investment plan provides funding visibility extending to 2030 and beyond, offering strategic certainty for planning purposes.
The results reflect CEO Tufan Erginbilgic’s turnaround strategy, which has repositioned Rolls-Royce beyond its traditional aerospace focus. The company is increasingly establishing itself as a supplier to both AI infrastructure expansion through its power systems division and the global military investment cycle, building a more resilient and diversified business portfolio.
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