Rolls-Royce Holdings has reported a £1 billion surge in annual profit, highlighting its resilience and potential for continued growth, which should reassure investors and industry stakeholders.
The engineering group said its core divisions were well positioned to benefit from key global trends such as increased defence spending and aerospace modernisation, as it posted a 40% rise in underlying operating profit to £3.5 billion for 2025, up from £2.5 billion the previous year.
Underlying revenues surpassed £20 billion, marking a 10% increase from 2024, underscoring the company’s expanding market presence and operational strength.
Rolls-Royce said performance was driven by gains across its civil aerospace, defence, and power systems businesses, highlighting its strategic strength and growth potential.
Demand for defence products remained robust throughout 2025, with the company securing contracts worth more than £1.5 billion from the Ministry of Defence and the United States Department of Defence.
These include agreements for EJ200 and AE 2100 engines used in military aircraft.
The company also pointed to new engine orders linked to the Eurofighter Typhoon programme from Italy, Germany, and Spain, as well as export agreements with Turkey. Rolls-Royce said these commitments would help sustain production well into the 2030s, reinforcing its positive outlook.
Beyond defence, the group reported particularly strong growth in its power systems division, where revenues rose by more than a third, underscoring promising prospects for industry stakeholders.
Executives noted that rising global demand for reliable power generation, driven by energy-intensive data centres supporting cloud computing and AI, is a key factor fuelling the power systems division’s expansion and strategic importance.
The surge reflects broader investment in digital capacity and energy resilience across major economies.
Following the improved 2025 performance, Rolls-Royce upgraded its medium-term profit guidance, aiming to instil confidence and optimism about sustained growth through 2028, based on assumptions of continued recovery in civil aviation, defence procurement cycles, and growth in power generation markets.
This represents a significant increase from its previous target range of £3.6 billion to £3.9 billion.
The revised outlook suggests management expects sustained momentum across civil aviation recovery, defence procurement cycles and structural demand growth in power generation.
Chief executive Tufan Erginbilgic said: “With our new capabilities and mindset, we have navigated challenges from supply chain to tariffs, and delivered a strong performance in 2025, all while we built the foundations for significant growth for years to come.
“Based on our 2026 guidance, we expect to deliver underlying operating profit within the prior mid-term guidance range two years earlier than planned.
“Beyond the mid-term we continue to see significant growth from existing businesses as well as from new business opportunities.”
