Rolls-Royce Shares Soars 103% in 12 Months as Transformation Delivers Results

Rolls-Royce shares (LON:RR)  have emerged as one of the FTSE 100's standout performers over the past year, surging 103% and holding firmly above the psychologically significant 1,200p mark.

The aerospace engineering giant's remarkable turnaround has captured market attention, driven by operational improvements, strategic investments, and a restored shareholder returns policy that signals renewed confidence in the company's trajectory.

The stock's ascent reflects a fundamental transformation under CEO Tufan Erginbilgic, whose comprehensive restructuring programme has delivered measurable improvements across the business. Markets have responded enthusiastically to evidence that the turnaround strategy is translating into financial performance, with the share price now trading at levels not seen since before the pandemic devastated the aviation sector.

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Operational improvements have been particularly pronounced in the Civil Aerospace division, which achieved operating margins of 24.9% in the first half of 2025, up from 18.0% the previous year. This margin expansion reflects both volume recovery as flying hours increase and the benefits of cost efficiencies implemented across the business. The division continues to benefit from the long-term service agreements that generate recurring revenue as aircraft utilization returns to pre-pandemic levels.

The reinstatement of dividends marked a symbolic milestone in the recovery story. Rolls-Royce announced a 6p per share dividend alongside a £1 billion share buyback programme, returning capital to shareholders for the first time since the dividend was suspended during the pandemic crisis. Markets interpreted these moves as a clear signal that management views the balance sheet as sufficiently robust to support both growth investments and shareholder distributions.

Strategic initiatives are positioning Rolls-Royce for future growth beyond the current recovery cycle. The company is developing engines for the next generation of narrowbody aircraft, marking a significant re-entry into a market segment it exited over a decade ago. This move could open substantial new revenue opportunities in the world's largest commercial aviation market.

Additionally, Rolls-Royce is investing £4.1 billion in its Ultrafan technology, with a demonstrator expected within two years, targeting improved fuel efficiency and reduced emissions to meet evolving regulatory requirements.

The transformation has involved difficult decisions, including workforce reductions and portfolio rationalization, but the financial results validate the strategic direction. Cost-cutting measures have improved operational leverage, allowing profit growth to outpace revenue increases as volumes recover. This operating performance has enabled the company to deleverage the balance sheet while simultaneously funding growth investments and returning capital to shareholders.

Markets now face the question of valuation sustainability. The 103% gain over twelve months has been supported by earnings upgrades and multiple expansion, but the stock's continued performance will depend on execution against the elevated guidance.