Rolls-Royce shares continued their extraordinary rise on Thursday after the company raised its full-year profit guidance, thanks to strong performance in its civil aerospace and defence sectors.
The FTSE 100 company now estimates annual operating profit will be between £3.1 billion and £3.2 billion, an increase from the company's prior estimate of £2.7-£2.9 billion and higher than the annual £2.5 billion made last year.
The momentum behind Rolls-Royce’s upgrade reflects a powerful recovery in global long-haul air travel.
Large engine flying hours, a key metric related to servicing revenue, increased 8% Y/y in the 10 months to October and are 109% above pre-pandemic levels.
This increased flying has reignited activity for the company's civil aerospace division, which supplies and services engines for wide-body commercial jets.
Rolls-Royce also entered a new pipeline of engine contracts with carriers like IndiGo, Malaysia Airlines, and lessor Avolon, strengthening demand.
Management stated that renegotiated contracts, better operational efficiency, and upgrades that extended engine life on the wing all helped improve margins.
These improvements mean the company is converting increased flying hours into stronger profitability.
Rolls-Royce’s defence business has also become a pillar of growth as governments accelerate military spending.
Following the UK-Turkiye agreement signed in October, Rolls-Royce will benefit from engine sales linked to the planned export of 20 Eurofighter Typhoon jets, along with ongoing maintenance contracts that provide long-term revenue visibility.
Chief Executive Tufan Erginbilgic said the company’s transformation programme remains on track, noting that the combination of restructuring, better cost control, and operational discipline has put the group in its strongest financial position in years.
He added that Rolls-Royce is confident in achieving free cash flow of £3-£3.1 billion for the year despite persistent supply-chain friction.
Outside aviation, Rolls-Royce’s fortunes in the energy sector received an important boost. The company's small modular reactor (SMR) project was co-awarded by Czech utility CEZ to build the first three SMR units in the UK at Wylfa in Anglesey.
The units will be built from 2026 onwards, and first-generation power is expected by the mid-2030s. The project is said to create thousands of jobs and billions of pounds in investment, and put the UK in a position to compete in next-generation nuclear technology.
The decision created diplomatic tension with the US, whose ambassador said he was disappointed the UK did not select Westinghouse, the American firm recently awarded an $80 billion US nuclear contract.
British officials explained the decision as a strategic investment in the UK’s homegrown innovation and long-term energy security.
In Rolls-Royce’s case, the announcement of the Wylfa SMR site will boost confidence about the company's expanding clean energy portfolio and accelerate ambitions to export SMR technology around the world.
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Rolls-Royce’s share price climbed above £900 for the first time, reaching £1,151.50, nearly doubling year-to-date.
Investors have rewarded the company’s dramatic turnaround since Erginbilgic took the helm in early 2023, when he famously described the business as a “burning platform” in need of urgent change.
Analysts say the turnaround story is now undeniable. Aarin Chiekrie of Hargreaves Lansdown noted that with strong demand, rising flying hours, and an improving balance sheet, the company is “cruising above the clouds.”
The £1 billion share buyback programme is almost complete, and barriers to entry in the aerospace industry remain extremely high, giving Rolls-Royce a firm competitive edge.
AJ Bell’s Russ Mould added that although the stock’s valuation has soared, the company maintains a track record of outperforming its own guidance, a trend markets expect could continue when full-year results are released.
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With rising global demand for wide-body aircraft, mounting geopolitical tensions driving defence orders, and a landmark SMR project underway, Rolls-Royce has entered one of its strongest growth cycles in decades.
The upgraded profit guidance underscores a company that has not only recovered from a crisis but appears poised for long-term expansion across multiple high-value sectors.