Rolls-Royce Buyback Lifts Profit And Targets

Rolls-Royce Holdings PLC (RYCEY) said on Feb. 26, 2026, that stronger civil-aerospace demand and efficiency gains boosted profit, while a new buyback program will expand shareholder returns and strengthen the balance sheet.

Stronger Profits and Upgraded Guidance

The company reported underlying operating profit of £3.5 billion for 2025, a 40% increase from 2024, with an underlying operating margin rising 450 basis points to 17.3%. Rolls-Royce set 2026 guidance for underlying operating profit between £4.0 billion and £4.2 billion and free cash flow of £3.6 billion to £3.8 billion, with the guidance midpoint above consensus estimates.

Management also raised medium-term targets for 2028, aiming for underlying operating profit of £4.9 billion to £5.2 billion, an operating margin of 18% to 20%, and free cash flow of £5.0 billion to £5.3 billion. The company targets a return on capital of 23% to 26%. Chief Executive Tufan Erginbilgic said, "Our transformation continues with pace and intensity."

Buyback Program and Balance Sheet Strength

Rolls-Royce announced a multi-year share buyback program totaling £7 billion to £9 billion for 2026–2028, with a £2.5 billion tranche planned for 2026. The company completed a £1.0 billion repurchase in 2025, its first buyback in a decade.

The stronger capital allocation follows a significant balance sheet improvement. Net cash at the end of 2025 stood at £1.9 billion, up from £475 million a year earlier. The board proposed reinstating a final 2025 dividend of 5.0p per share, bringing total dividends for the year to 9.5p per share, representing about 32% of underlying profit after tax. This dividend is subject to shareholder approval at the Annual General Meeting on Apr. 30, 2026, with an ex-dividend date of Apr. 24 and payment scheduled for June 3. A dividend reinvestment plan will be offered.