Rolls-Royce Confirms Strong Performance, Reaffirming Full Year Guidance

Rolls-Royce (LON:RR) has released a trading update to 31 October 2025, signaling continued strong performance across all divisions.

The announcement reinforces confidence in the company's Full Year 2025 guidance, projecting an underlying operating profit between £3.1 billion and £3.2 billion and free cash flow of between £3.0 billion and £3.1 billion.

This is despite ongoing supply chain challenges impacting the broader aerospace and industrial sectors.

The Civil Aerospace division is experiencing robust demand, evidenced by significant large engine orders from major players such as IndiGo, Malaysia Airlines, and Avolon in the second half of the year.

The Trent XWB-97 engine, powering the Airbus A350F, is also gaining traction, particularly in Greater China and the Asia Pacific region, with orders from Air China Cargo and Korean Air. Large engine flying hours have increased by 8% year-on-year, reaching 109% of 2019 levels.

Rolls-Royce's Defence sector remains solid, with continuing demand for its products and services. The Global Combat Air Programme (GCAP) consortium is expanding its partnership to boost power and propulsion systems development.

Additionally, an agreement has been signed between the Republic of Türkiye and the UK for the export of 20 Eurofighter Typhoon aircraft to Türkiye, which will be powered by Rolls-Royce's EJ200 engines. Progress on Project Pele, the US Government's transportable microreactor project, remains on track, highlighting collaboration in the US on nuclear energy applications.

Power Systems is experiencing strong order intake and revenue growth, primarily driven by power generation, particularly from data centers and governmental projects.

The next-generation engine development is progressing, with an expected service entry in 2028. This engine targets the data center backup power generation market, promising higher power density, lower emissions, and improved fuel consumption. A new fast-start gas generator product, available from 2026, has been launched to cater to data center customers awaiting grid connections.

Rolls-Royce SMR is advancing in the Swedish competition to select a nuclear technology partner, with Vattenfall focusing on small nuclear options. In the UK, where Rolls-Royce SMR is the preferred technology provider by Great British Energy-Nuclear (GBE-N), commercial terms are expected to be finalized later this year.

Rolls-Royce SMR has also entered the US regulatory process, marking a critical step for future jobs and investment potential.

The company is committed to efficiency and simplification, with the opening of a global capability and innovation center in Bengaluru, India, to support key global corporate functions. Rolls-Royce's balance sheet continues to strengthen, supported by growing cash delivery.

Credit rating agencies have recognized these efforts, with S&P Global upgrading the company to BBB+ in August. The company successfully repaid a $1 billion bond that matured in October.

Key Financial Highlights:

• Underlying Operating Profit Guidance: £3.1bn – £3.2bn
• Free Cash Flow Guidance: £3.0bn – £3.1bn
• Share Buyback Progress: £0.9bn completed out of £1bn program

Driver Breakdown:

• Civil Aerospace: Strong engine orders and increased flying hours.
• Defence: Robust demand and strategic partnerships (GCAP).
• Power Systems: Growth in power generation, especially data centers.

CEO Tufan Erginbilgic stated, “Strong performance across the Group, driven by our actions and strategic initiatives, was in line with our expectations. This builds further confidence in our Full Year 2025 guidance of underlying operating profit of between £3.1bn and £3.2bn and free cash flow of between £3.0bn and £3.1bn despite continued supply chain challenges. We are continuing to progress our transformation programme, delivering profitable growth, and further strengthening our balance sheet.”