Rolls-Royce on track to meet guidance despite Iran war, shares spark

(Sharecast News) - Rolls-Royce held guidance after making a strong start to the year across all divisions as it moved quickly to mitigate the impact of the Iran war, sending shares in the aerospace engineer up more than 7% on Thursday. The military and civil supplier still expects £4.0bn-£4.2bn of underlying operating profit and £3.6bn-£3.8bn of free cash flow in 2026.

"We expect to fully mitigate the current financial impact of the disruption to our business," said chief executive Tufan Erginbilgic.

Rolls-Royce supplies airlines with engines for their jets and gets paid for every hour they are in the air. The US-Israel war on Iran and Lebanon has seen massive disruption to the Middle East, a key flight hub.

In a trading update ahead of its annual shareholders meeting, Rolls said there had been a recovery in engine flying hours from Middle Eastern airlines, with some engines now back at pre-conflict levels, while other regions had registered growth as carriers reallocated capacity.

"The unbroken ascent in Rolls-Royce shares since the appointment of CEO Tufan Erginbilgic has been interrupted by some turbulence in recent months, but today's trading update helped restore some calm," said AJ Bell investment director Russ Mould.

"Rolls typically works on projects with extended timeframes which won't be affected overnight by geopolitical disruption. Higher fuel costs may even prompt some operators in the aviation sector to upgrade their fleets early to improve efficiency."

"However, the longer the crisis goes on the greater the risk of disruption to the airline sector which then has a knock-on effect in terms of delays and cancellations to existing work."

"Helpfully the company has strengthened its balance sheet which provides a useful buffer for any stormy weather Rolls might encounter in the market backdrop."

Reporting by Frank Prenesti for Sharecast.com

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