Rolls Royce Share Price rises as group posts strong 2025 results and unveils buyback plan
The rolls royce share price moved higher after the company published its 2025 full-year results and announced a multi-billion-pound share buyback. The set of figures, targets and cash returns has prompted a sharp market reaction and an upgraded financial outlook stretching into 2026 and the mid term.
2025 profit, EPS and cash flow: underlying operating profit at £3. 46bn
Rolls-Royce reported underlying operating profit of £3. 46bn for 2025, up 38% year-on-year on an organic basis, while basic earnings per share rose 46% to 29. 55p. The group finished 2025 with free cash flow of £3. 27bn, which was £845m higher than a year earlier.
The company also recognised a £277m credit to underlying profit after tax in 2025 linked to 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 unless otherwise stated, with reconciliations and definitions referenced in the firm's notes and pages for further detail.
Divisional performance: civil aerospace, defence and power systems breakdown
Revenue for the year was £20. 06bn, up 14% on 2024. Civil aerospace was the largest contributor, with revenue for that division growing 15% to £10. 38bn in 2025. The defence business generated £4. 77bn of revenue, an 8% increase on 2024, while the power systems division contributed £4. 89bn, up 19% year-on-year.
Rolls Royce Share Price reaction and market context
The company's results helped drive the stock 6% higher on Thursday morning, with the share price having risen about 120% over the prior year. Market commentary singled out the announced buyback as a key catalyst for the jump, with some analysts comparing the move to notable share-price-supporting actions in other industries.
Investors have shown renewed interest in UK defence-related stocks over the past year, including Rolls-Royce, BAE Systems and Babcock International, amid heightened geopolitical tensions. Last year, NATO members committed to raising defence and related spending to 5% of their countries' gross domestic product by 2035, and in February the UK prime minister said Britain needed to "go faster" on defence spending.
Dividends, buyback and guidance: £7bn–£9bn repurchase and a 2026 outlook
Rolls-Royce declared a final dividend of 5p per share, taking the total for the year to 9. 5p, which was 58% higher than 2024. 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 announced a £7bn–£9bn share buyback programme for 2026–2028, with £2. 5bn to be completed this year. For 2026 guidance, it expected to deliver underlying operating profit of £4bn to £4. 2bn and free cash flow of £3. 6bn to £3. 8bn. The group 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 prior mid-term targets of £3. 6bn–£3. 9bn and free cash flow guidance of £4. 2bn–£4. 5bn that were set in the company's half-year results.
Strategy, CEO commentary and longer-term ambitions
Chief Executive Tufan Erginbilgic said the company's transformation "continues with pace and intensity, " adding that new capabilities and a changed mindset had helped Rolls-Royce navigate challenges from the supply chain to tariffs and deliver a strong performance in 2025 while building foundations for significant growth.
The company described its work as developing and delivering complex power and propulsion solutions for safety-critical applications in the air, at sea and on land, and said its products and service packages enable customers to connect people, societies, cultures and economies. Rolls-Royce noted it has been at the forefront of innovation for more than 100 years and framed its strategic framework around four strategic pillars, with significant progress made against each over the past three years, including in 2025.
The firm highlighted strategic initiatives such as advantaged businesses and lower-carbon, digitally enabled businesses that it says are continuing to expand earnings and cash potential. With a strong balance sheet and significant investment to support long-term growth, it expects significant further progress in 2026 and, based on 2026 guidance, to deliver underlying operating profit within the prior mid-term guidance range two years earlier than planned.
Peer results and sector outlook
Rolls-Royce's figures arrived a week after BAE Systems published preliminary annual results. BAE posted 10% growth in sales for the year to £30. 67bn, with underlying earnings per share up 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. The article context contains an incomplete reference to Babcock in the sector discussion that is unclear in the provided context.
