Rolls-Royce ups profit, cash flow guidance as H1 earnings surge

(Sharecast News) - Aerospace and defence engineer Rolls-Royce has raised its full-year guidance after a strong first half, in which underlying revenues grew by double-digits and operating profits surged by 50%. The company now expects to book an full-year underlying operating profit of £3.1bn-3.2bn for 2025, up from previous guidance of £2.7bn-2.9bn, while the free cash flow target has been upped to £3.0bn-3.1bn from £2.7bn-2.9bn.

Underlying revenues in the first half to 30 June totalled £9.06bn, up 13% over last year, helped by a 17% surge in Civil Aerospace sales to £4.79bn and a 20% jump in Power Systems to £2.04bn.

The Defence division registered just 1% growth in underlying revenues to £2.22bn, as 29% growth in Transport sales were offset by lower submarine revenues, which fell 19% due to a one-off gain the previous year.

Group underlying operating profit jumped to £1.73bn, up from £1.15bn a year earlier, as the operating margin jumped to 19.1% from 14.0%.

Free cash flow improved to £1.58bn from £1.16bn, driven by strong operating profit and continued long-term service agreement balance growth, the group said.

"Our multi-year transformation continues to deliver. Our actions led to strong first half year results, despite the challenges of the supply chain and tariffs. We are continuing to expand the earnings and cash potential of Rolls-Royce," said chief executive Tufan Erginbilgic.