Rolls Royce Share Price jumps as profits surge and large buyback is unveiled
The rolls royce share price rose after the aerospace engineer reported a near-40% jump in profits for 2025 and announced a major share buyback and upgraded targets, moves that pushed the stock sharply higher on the day.
Profits, cash and revenue: the headline numbers
The company reported underlying operating profit of £3. 46bn for 2025, up 38% year-on-year on an organic basis, and basic earnings per share were 29. 55p, up 46% for the year. Free cash flow finished 2025 at £3. 27bn, £845m higher than a year earlier, and revenue came in at £20. 06bn, up 14% on 2024.
Division performance and shareholder payback
The civil aerospace division produced the biggest share of revenue, growing 15% to £10. 38bn in 2025. The defence business delivered £4. 77bn of revenue, up 8% on 2024, while the power systems division contributed £4. 89bn, growing 19% year-on-year. The company declared a final dividend of 5p per share, taking the total for the year to 9. 5p, 58% higher than 2024.
Rolls Royce Share Price reaction and analyst comments
Shares popped on Thursday and were 6% higher on Thursday morning, with the stock having risen 120% over one year. Chris Beauchamp, chief market analyst at IG, said the share buyback helped engineer a post-results bounce and compared the stock’s move to that of high-performing tech names.
Upgraded guidance, buybacks and near-term cash plans
it expects underlying operating profit of £4bn to £4. 2bn in 2026 and free cash flow of £3. 6bn to £3. 8bn. It also upgraded its mid-term targets to underlying operating profit of £4. 9bn-£5. 2bn and free cash flow of £5. 0bn-£5. 3bn, up from previous mid-term targets of £3. 6bn-£3. 9bn for operating profit and £4. 2bn-£4. 5bn for free cash flow. Management announced a £7bn-£9bn share buyback programme across 2026-2028, with £2. 5bn to be completed this year.
Company mission, footnotes and accounting adjustments
it develops and delivers complex power and propulsion solutions, and that for more than 100 years it has been at the forefront of innovation, helping to power, protect and connect the modern world. It described its products and service packages as enabling customers to connect people, societies, cultures and economies, and said it plays a fundamental role in meeting environmental and societal opportunities and challenges. The firm noted its strategic framework is founded on four strategic pillars, that it has made significant progress over the past three years including in 2025, and listed initiatives such as "Advantaged businesses & strategic initiatives" and "Lower carbon & digitally enabled businesses. " these strategic initiatives are continuing to expand the earnings and cash potential of the business and that it expects significant further progress in 2026.
Tax credit, reconciliations and dividend logistics
Footnotes in the results stated that all underlying income statement commentary is provided on an organic basis unless otherwise stated and that a reconciliation of alternative performance measures to their statutory equivalent is provided on pages 52 to 55. The Group recognised a £277m credit to underlying profit after tax in 2025 in respect of 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 (see note 5, page 33). Adjusted return on capital is defined on page 55 and is abbreviated to return on capital. The dividend will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026; in addition to the cash dividend, shareholders will be offered a dividend reinvestment plan (see note 7, page 34).
Market context: defence spending and sector peers
Investors have poured money into UK-listed defence-related stocks over the past year, including Rolls-Royce, BAE Systems and Babcock International, as governments have pledged higher defence spending amid geopolitical tensions. Last year, Nato members committed to increasing spending on defence and related areas to 5% of their countries' gross domestic product by 2035. Earlier in February, UK prime minister Keir Starmer said that Britain needed to "go faster" on defence spending. The company's latest figures arrived a week after BAE Systems delivered preliminary annual results: BAE posted 10% growth in sales for the year to £30. 67bn and underlying EPS rose 12% to 75. 2p. For the year ahead, BAE said it expected sales to increase 7% to 9% and forecast 9% to 11% growth in underlying EPS. Meanwhile, Babcock
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Tufan Erginbilgic, CEO, said the company's transformation "continues with pace and intensity, " that the business had navigated challenges from supply chain to tariffs and delivered a strong performance in 2025, and that it had "built the foundations for significant growth for years to come. "
The rolls royce share price move came alongside the company’s reiterated near-term guidance, the new buyback programme and the planned dividend payment on 3 June 2026 to shareholders on the register on 24 April 2026; the firm said it expects further progress in 2026 as it executes the upgraded targets and buyback plan.
