Rolls Royce Share Price Surges After 2025 Results, £7bn–£9bn Buyback and Upgraded Targets Drive Momentum

The latest full-year results have sent the Rolls Royce Share Price sharply higher as the company reported a near-40% rise in profits for 2025, upgraded mid-term targets and unveiled a large multi-year share buyback. The combination of stronger earnings, higher free cash flow and explicit capital-return plans is now central to market reaction and near-term investor expectations.

Rolls Royce Share Price reaction and market move

Shares rose about 6% on Thursday morning and the stock has appreciated roughly 120% over the past year. The immediate market response followed the company’s presentation of 2025 figures and its commitment to a sizeable buyback program that allocates £2. 5bn to be completed this year as part of a £7bn–£9bn repurchase plan spanning 2026–2028.

Key 2025 results that moved the needle

The company reported an underlying operating profit of £3. 46bn for 2025, a 38% increase year-on-year on an organic basis. Basic earnings per share rose 46% to 29. 55p. Free cash flow for 2025 finished at £3. 27bn, an increase of £845m versus the prior year. Revenue was £20. 06bn, up 14% on 2024.

• Civil aerospace revenue: £10. 38bn, up 15%.
• Defence business revenue: £4. 77bn, up 8%.
• Power systems revenue: £4. 89bn, up 19%.
• Final dividend declared: 5p per share; total for year: 9. 5p, 58% higher than 2024.

Guidance, upgraded targets and cash returns

The company set 2026 guidance expecting underlying operating profit of £4. 0bn to £4. 2bn and free cash flow of £3. 6bn to £3. 8bn. Mid-term targets were upgraded to underlying operating profit of £4. 9bn–£5. 2bn and free cash flow of £5. 0bn–£5. 3bn, an increase from prior mid-term targets of £3. 6bn–£3. 9bn for operating profit and free cash flow guidance of £4. 2bn–£4. 5bn. Management announced the £7bn–£9bn buyback across 2026–2028, with £2. 5bn to be completed this year.

Dividend mechanics and notable accounting items

The company will pay the declared dividend 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. 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. Reconciliations and further detail are referenced in internal notes and supporting pages, including pages 52 to 55, note 5 on page 33 and note 7 on page 34; adjusted return on capital is defined on page 55. Underlying income statement commentary is provided on an organic basis unless otherwise stated.

Strategy, CEO comments and forward view

CEO Tufan Erginbilgic said the company’s transformation continues with "pace and intensity, " noting that the business has navigated challenges from supply chain issues to tariffs while delivering a strong 2025 performance and building foundations for significant growth. Management framed progress within a strategic framework founded on four strategic pillars, and said it has made significant progress against each pillar over the past three years, including in 2025. Two named pillars are Advantaged businesses & strategic initiatives and Lower carbon & digitally enabled businesses. The company expects significant further progress in 2026 and foresees growth from existing businesses as well as new opportunities.

Wider market context and peer activity

Investor appetite for defence-related stocks has been a background factor. Commentary from market analysts highlighted that the share buyback was a key element of the rally, with one market analyst noting the buyback's impact relative to other high-profile technology rallies. Investors have increasingly allocated to UK-listed defence-related names including Rolls-Royce, BAE Systems and Babcock International amid renewed focus on defence spending. NATO members have committed to increasing defence-related spending to 5% of GDP by 2035, and the UK prime minister, Keir Starmer, said Britain needed to "go faster" on defence spending.

Peer results landed in the same window: BAE Systems delivered preliminary annual results showing 10% growth in sales to £30. 67bn and a 12% increase in underlying EPS to 75. 2p. BAE set expectations for next-year sales growth of 7%–9% and forecast underlying EPS growth of 9%–11% for the year ahead.

The combination of stronger operating profit, cash generation, upgraded mid-term ambitions and a large buyback program has reshaped investor expectations and been a catalyst for the recent move in the Rolls Royce Share Price. Market conditions, execution of growth initiatives and progress against strategic pillars will be the variables that determine whether momentum holds through 2026 and beyond.