Rolls Royce Share Price in Focus After Company Announces £7bn–£9bn Buyback and Seeks UK Backing for £3bn UltraFan 30
The engine maker disclosed a major capital return plan and asked ministers for taxpayer assistance on a new small‑aircraft engine, moves that are likely to shape investor attention on the Rolls Royce Share Price. The announcements accompanied full‑year results showing a 40% rise in underlying profits and upgraded mid‑term targets tied to faster delivery of operating profit and free cash flow.
Tufan Erginbilgic frames the turnaround and guidance
Tufan Erginbilgic, chief executive, said the company’s transformation "continues with pace and intensity, " and that new capabilities and a different mindset helped Rolls‑Royce navigate supply‑chain pressures and tariff turbulence while producing a strong 2025 performance. Erginbilgic, a former BP executive who took charge in January 2023 and warned staff the business was standing on a "burning platform, " has attributed gains to cost cuts, renegotiated loss‑making contracts and improved commercial terms with airline customers.
The group’s 2025 underlying profit after tax rose to £3. 5bn, up from £2. 5bn the year before — a 40% increase that management said was driven in part by booming demand for power from datacentres and stronger performance across its aerospace and power divisions. Based on 2026 guidance, the company now expects to deliver underlying operating profit within the prior mid‑term guidance range two years earlier than planned, with upgraded mid‑term targets including operating profit of £4. 9bn–£5. 2bn and free cash flow of £5. 0bn–£5. 3bn.
£7bn–£9bn share buyback and the £2. 5bn this year
With a strengthened balance sheet and continued investment for long‑term growth, Rolls‑Royce announced a £7bn–£9bn share buyback programme for 2026–2028, and said £2. 5bn of that will be completed this year. Other descriptions of the plan framed it as up to £9bn to be returned to shareholders over the next three years,; management called the move the group’s largest cash return in a decade. The full‑year materials note that a £277m credit to underlying profit after tax in 2025, relating to deferred tax assets on UK tax losses, has been adjusted in calculations of earnings per share, the proposed dividend payout ratio and return on capital (see note 5, page 33).
UltraFan 30: a £3bn project and request for £100m–£200m of UK support
Separately, Rolls‑Royce urged ministers to consider taxpayer backing for a £3bn engine project aimed at powering smaller commercial aircraft, known in company materials as UltraFan 30. Management has already invested more than £1bn in the programme and has asked the UK government for an initial contribution between £100m and £200m to help develop and test the engine. Erginbilgic said lack of support would be "a sort of strange thing to do, " noting that international rivals receive two or three times the state support Rolls‑Royce is seeking and that the company is competing in a global market.
The UltraFan 30 would mark Rolls‑Royce’s return to the narrow‑body, short‑haul market it exited in 2013; narrow‑body planes constitute the vast majority of commercial aircraft in operation. Erginbilgic added that any government contribution would be a fraction of the company’s own spending on the programme.
Power systems and civil aerospace profits that lifted results
The company highlighted a 60% jump in profit at its power systems division to £852m, reflecting demand for generators used by datacentres as technology firms build infrastructure for artificial intelligence. The civil aerospace division — still the largest profit contributor — saw a 41% increase in profits to £2. 1bn as Rolls‑Royce serviced more engines and benefited from improved contract terms; the business also derives recurring revenue "every time one of its engines is in the air. "
The firm had to navigate a tariff dispute in 2025 but its engines, which power Boeing’s 787 passenger jet, were exempted under a US‑UK trade deal struck in May.
Dividends, governance notes and strategic pillars
Rolls‑Royce confirmed a dividend that will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026, and said shareholders will be offered a dividend reinvestment plan (see note 7, page 34). The company reiterated that its strategic framework rests on four pillars and highlighted progress across those pillars over the past three years, including in 2025, with particular emphasis on "advantaged businesses & strategic initiatives" and "lower carbon & digitally enabled businesses, " and signalled it expects significant further progress in 2026. Reconciliations of alternative performance measures to statutory equivalents are provided on pages 52–55, and adjusted return on capital is defined on page 55.
Materials accompanying the results also included an item titled "Client Challenge. " What makes this notable is that the combination of a large buyback, a near‑term dividend, and a plea for modest state support crystallises the choices management is making between returning cash to investors and continuing heavy investment in new technology.
Investors watching the Rolls Royce Share Price will weigh the company’s stated confidence in its transformation, the upgraded mid‑term targets, and the scale of the UltraFan 30 commitment alongside the announced capital returns and the detailed adjustments disclosed in the full‑year notes.
