Rolls Royce Share Price Jumps After Near-40% Profit Rise and £9bn Buyback Plan
The Rolls Royce Share Price climbed sharply after the company disclosed a near-40% rise in 2025 profits and unveiled a major share buyback programme. The combination of stronger-than-expected results, upgraded targets and a record repurchase plan pushed the stock to fresh highs and reshaped forecasts for 2026 and beyond.
Financial results: underlying operating profit, revenue and divisional performance
Rolls-Royce reported underlying operating profit of £3. 46bn for 2025, an increase of 38% year‑on‑year on an organic basis. Revenue for the year reached £20. 06bn, up 14% on 2024. The civil aerospace division accounted for the largest share of sales, generating £10. 38bn, a 15% rise. The defence business produced £4. 77bn, up 8%, while the power systems division contributed £4. 89bn, growing 19% year‑on‑year.
Basic earnings per share rose 46% to 29. 55p, and free cash flow for 2025 totalled £3. 27bn—£845m higher than a year earlier. Management declared a final dividend of 5p per share, taking the total dividend for the year to 9. 5p, 58% higher than in 2024.
Share buyback of £7bn–£9bn and market reaction
The board announced a share buyback programme of £7bn–£9bn to be executed across 2026–2028, with £2. 5bn planned for completion in the current year. The largest-figure end of the range equates to roughly $12bn and represents one of the largest repurchase programmes in recent UK corporate history. Following the announcement, shares rose about 6% on the morning of the results and reached record highs in London trading, leaving the stock approximately 120% higher over the past year.
Tufan Erginbilgic frames transformation and upgraded targets
Chief Executive Tufan Erginbilgic said the company’s transformation is proceeding "with pace and intensity, " noting new capabilities helped Rolls‑Royce navigate supply chain issues and tariffs while delivering a strong 2025 performance. Management upgraded mid‑term targets to underlying operating profit of £4. 9bn–£5. 2bn and free cash flow of £5. 0bn–£5. 3bn, and said it expects to deliver underlying operating profit within the prior mid‑term guidance range two years earlier than planned based on 2026 guidance.
For 2026 the company expects underlying operating profit of £4. 0bn–£4. 2bn and free cash flow of £3. 6bn–£3. 8bn. The previous mid‑term targets were £3. 6bn–£3. 9bn for underlying operating profit and £4. 2bn–£4. 5bn for free cash flow.
Dividends, tax credit and balance sheet actions
The group recognised a £277m credit to underlying profit after tax in 2025 related to deferred tax assets on UK tax losses; that £277m credit has been adjusted in calculations of earnings per share, the proposed dividend payout ratio and return on capital. The dividend will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026, and shareholders will be offered a dividend reinvestment plan. Management said the company has a strong balance sheet and is making significant investment to support long‑term growth.
Rolls Royce Share Price reaction in London trading
Market commentary highlighted that the buyback helped catalyse the share move. One market analyst observed that the repurchase programme provided the key impetus for the share price surge, comparing the impact to other high‑profile market moves in different sectors. Investors have also been favouring defence‑linked stocks amid heightened geopolitical tensions, a dynamic that has supported demand for Rolls‑Royce equity.
Defence spending backdrop and peer performance
Investor appetite for defence‑related companies has been underpinned by commitments from NATO members to increase defence-related spending to 5% of GDP by 2035 and public calls from the UK prime minister to "go faster" on defence spending. Rolls‑Royce’s results arrived a week after fellow UK defence contractor BAE Systems published preliminary annual results: BAE posted a 10% rise in sales to £30. 67bn and a 12% increase in underlying EPS to 75. 2p, and it forecast sales growth of 7%–9% and underlying EPS growth of 9%–11% for the year ahead. Meanwhile, Babcock—unclear in the provided context.
What makes this notable is the combination of immediate cash returns to shareholders and simultaneously upgraded profit and cash targets, which together altered investor expectations for the group’s medium‑term trajectory.
Rolls‑Royce reiterated its strategic framework built on four pillars, citing progress over the past three years including 2025, and highlighted initiatives such as advantaged businesses and strategic initiatives, and lower‑carbon and digitally enabled businesses as continuing to expand earnings and cash potential with significant further progress expected in 2026.
