Rolls Royce Share Price: Buyback and 40% Profit Surge Force Market Reaction
Recent results and a large new buyback programme have put the rolls royce share price squarely in focus. The company posted a 40% rise in underlying profits for 2025 and announced a multi-year share repurchase plan of £7bn-£9bn, with £2. 5bn slated for completion this year, prompting a near 7% jump in the shares in early trading.
Rolls Royce Share Price reaction to results and buyback
The combination of stronger earnings and an explicit commitment to return capital pushed shares higher, with shares rising almost 7% on a single trading morning. The broader market also reflected the move, with the FTSE 100 reaching a listed high of 10, 825 points, up 18 points, or 0. 15% on the same session.
Full-year results and upgraded guidance
Underlying profits for 2025 were reported at £3. 5bn, up from £2. 5bn the year before, representing a 40% increase. Management has upgraded mid-term targets: underlying operating profit is now expected in a range of £4. 9bn-£5. 2bn, and free cash flow guidance is £5. 0bn-£5. 3bn. Based on 2026 guidance, the group expects to deliver underlying operating profit within the prior mid-term guidance range two years earlier than previously planned.
The results also recorded a £277m credit to underlying profit after tax related to deferred tax assets on UK tax losses. That £277m credit has been adjusted in the calculation of earnings per share, the proposed dividend payout ratio, and return on capital; reconciliations and further details are referenced in the formal notes (see note 5, page 33 and reconciliation on pages 52 to 55). Adjusted return on capital is defined on page 55.
Share buybacks, dividends and shareholder returns
The company announced a £7bn-£9bn share buyback programme covering 2026–2028, with £2. 5bn of buybacks to be completed this year. In addition, the company will return £2. 5bn to shareholders this year as part of the longer-term buyback plan and completed a prior buyback last year returning £1bn to investors. A cash dividend will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026, and a dividend reinvestment plan will be offered (see note 7, page 34 for details).
Division performance highlights and AI datacentre demand
Performance was driven by strong demand for power systems used by datacentres: profits at the power systems division rose 60% to £852m. Civil aerospace remained the largest profit contributor, with profits from that division increasing by 41% to £2. 1bn, helped by servicing more engines and improved commercial terms on contracts. The company attributed part of the power systems strength to rising demand for datacentre power as technology companies expand AI infrastructure.
Strategy, transformation and other strategic moves
The company outlined that it develops and delivers complex power and propulsion solutions for safety-critical applications in the air, at sea and on land, and framed its role as connecting people, societies, cultures and economies. Management described a multi-year transformation that has improved outcomes, navigated supply-chain and tariff challenges, and built foundations for significant future growth. The strategic framework rests on four pillars, including advantaged businesses and strategic initiatives and lower-carbon and digitally enabled businesses, with significant progress noted over the past three years and expectations of further progress in 2026.
The firm was chosen to build the UK’s first small nuclear reactors at Wylfa in north Wales, backed by £2. 5bn of government funding, and management said it expects the business to be making money within five years.
Leadership, context and unresolved items
The chief executive is named in the materials as Tufan Erginbilgic; other coverage presents the name as Tufan Erginbilgiç. Management said the company’s turnaround continues with pace and intensity, noting actions on cost reduction, renegotiation of loss-making contracts and improved commercial terms with airline customers. The leadership change referenced earlier coverage when the chief executive took over in January 2023 and described the company as standing on a "burning platform" at that time.
The company also had to navigate a tariff dispute in 2025 tied to a broader trade conflict; the business was eventually exempted for its engines that power the Boeing 787 as part of a US–UK trade deal struck in May. An item titled "Client Challenge" appears in the material but is unclear in the provided context.
These combined operational results, capital returns and strategic commitments are now the immediate backdrop for investor attention on the rolls royce share price as markets weigh stronger cash generation, upgraded targets and a large buyback plan against remaining execution and macro risks.
