Rolls Royce Share Price Climbs After 2025 Results as rolls royce share price Reaction Grows

The rolls royce share price rose sharply after the company published its 2025 full year results and announced a major buyback. The set of figures and guidance for 2026 and beyond prompted a strong market reaction on Thursday.

Financial headline numbers

Rolls-Royce posted underlying operating profit of £3. 46bn for 2025, a 38% year-on-year increase on an organic basis. Basic earnings per share rose 46% to 29. 55p. The group ended 2025 with free cash flow of £3. 27bn, £845m higher than a year earlier, and reported revenue of £20. 06bn for the year, up 14% on 2024.

Business breakdown and divisions

The civil aerospace division generated £10. 38bn of revenue in 2025, up 15% year-on-year. The defence business produced £4. 77bn of revenue, up 8% on 2024, while the power systems division contributed £4. 89bn, growing 19% year-on-year.

Dividend, tax adjustment and pages noted

The company declared a final dividend of 5p per share, taking the total for the year to 9. 5p, 58% higher than 2024. A 2025 credit of £277m to underlying profit after tax (PAT) was recognised 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. The underlying income statement commentary is provided on an organic basis; a reconciliation of alternative performance measures to their statutory equivalent is provided on pages 52 to 55, further details of the £277m are given in note 5 on page 33, adjusted return on capital is defined on page 55, and dividend details and the dividend reinvestment plan are referenced in note 7 on page 34. The dividend will be paid on 3 June 2026 to ordinary shareholders on the register on 24 April 2026.

Rolls Royce Share Price Reaction

The bumper results and outlook moved shares in the FTSE 100 company 6% higher on Thursday morning; the stock has soared 120% over one year. Market commentary compared the scale of the move to other high-profile post-results rallies and cited the announced buyback as a key driver of the share-price bounce.

Guidance, buybacks and medium-term targets

Rolls-Royce set out expectations for 2026 of underlying operating profit of £4bn to £4. 2bn and free cash flow of £3. 6bn to £3. 8bn. The company 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 and free cash flow £4. 2bn-£4. 5bn. The group announced a £7bn-£9bn share buyback programme to run across 2026-2028, with £2. 5bn to be completed this year.

Management comment and transformation

Tufan Erginbilgic, CEO, said: "Our transformation continues with pace and intensity. We are consistently achieving outcomes that were not possible before our transformation. With our new capabilities and mindset, we have navigated challenges from supply chain to tariffs, and delivered a strong performance in 2025, all while we built the foundations for significant growth for years to come. Based on our 2026 guidance, we expect to deliver underlying operating profit within the prior mid-term guidance range two years earlier than planned. Our upgraded mid-term targets include underlying operating profit of £4. 9bn-£5. 2bn and free cash flow of £5. 0bn-£5. 3bn. Beyond the mid-term we continue to see significant growth from existing businesses as well as from new business opportunities. With a strong balance sheet, significant investment to support our long-term growth, and confidence in the future, we are announcing a £7bn-£9bn share buyback for 2026-2028 with £2. 5bn to be completed this year. "

Sector moves and political context

Investors have piled into UK-listed defence-related stocks over the past year, including Rolls-Royce, BAE Systems (BA. L) and Babcock International (BAB. L), as governments have pledged to spend more in this space amid heightened geopolitical tensions. 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.

Peer results and market views

Rolls-Royce's figures followed a week after BAE Systems delivered preliminary annual results: BAE posted 10% growth in sales for the year to £30. 67bn and underlying EPS increased 12% to 75. 2p. BAE said it expects sales to increase 7% to 9% on this year's figure and forecast 9% to 11% growth in underlying EPS for the year ahead. Commentary from market analysts highlighted the buyback as a catalyst: Chris Beauchamp, chief market analyst at IG, said, "Rolls-Royce has managed to do what Nvidia (NVDA) couldn't – engineer a share price bounce following results. The share buyback provided the magic sauce for today's surge to fresh highs, since, like Nvidia, the strong earnings backdrop was already expected by investors. "

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Corporate purpose and strategic pillars

Rolls-Royce reiterated core purpose statements: "We develop and deliver complex power and propulsion solutions. " it has done so "for more than 100 years" and remains "at the forefront of innovation, helping to power, protect and connect the modern world. " It added: "Help us deliver better power for our changing world, " and that it develops and delivers complex power and propulsion solutions for safety-critical applications in the air, at sea and on land. The company stated that its products and service packages enable customers to connect people, societies, cultures and economies together and that it has a fundamental role in meeting the environmental and societal opportunities and challenges that the world faces. The strategic framework is founded on four strategic pillars; it has made significant progress against each of these pillars over the past three years, including in 2025, highlighting "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.

Movements in the rolls royce share price will reflect delivery against the upgraded targets, the £277m PAT credit adjustment, the £7bn-£9bn buyback plan with £2. 5bn this year, and the strategic progress the company says it has made.

Closing: The 2025 full-year numbers, the £7bn-£9bn buyback plan and the upgraded mid-term targets provide the basis for the recent share-price rally and frame the company's outlook for 2026 and beyond.