Rolls-Royce has announced very respectable trading results for the period up to 31 October 2025, maintaining its full-year guidance of £3.1-3.2bn underlying operating profit and £3.0-3.1bn free cash flow.
With shares up another 100% in 2025, investors will ask if they have further to run. Today’s announcement suggests they probably have.
The company secured significant large-engine orders from IndiGo, Malaysia Airlines, and Avolon, whilst seeing growing demand for the Trent XWB-97-powered Airbus A350F from customers including Air China Cargo and Korean Air. Large engine flying hours grew 8% year-on-year to 109% of 2019 levels.
In defence, Rolls-Royce will supply EJ200 engines for 20 Eurofighter Typhoon aircraft bound for Türkiye, with options for additional orders. The Global Combat Air Programme partnership has also been expanded to accelerate power and propulsion development.
Power Systems experienced strong order intake led by data centre and governmental demand. The company successfully tested its first 100% methanol high-speed marine engine and launched a new fast-start gas generator for data centres, available from 2026.
Rolls-Royce shares were marginally weaker on Thursday, but this was nothing more than minor profit-taking rather than a major concern.
“Rolls-Royce continues to cruise above the clouds, with its third-quarter update showing little sign of turbulence. The group produces aeroplane engines for larger, long-haul planes,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Revenue growth this year is being boosted by the upward trend in engine-flying hours, which are now cruising at 109% of pre-pandemic levels. Margins are also improving thanks to contract renegotiation, operational efficiencies, and part upgrades, which are improving the time its engines spend on wing. All of this is helping Rolls-Royce convert the increased flying hours and revenue into profits.
“The Power Systems division continues to deliver robust revenue growth and strong order intake, fuelled by rising demand for data centre power solutions. As upgrades to grid infrastructure are expected to take years, Rolls-Royce’s on-site power generation systems are well-positioned to benefit from sustained demand over the medium term.
Chiekrie continued to explain that Rolls remains in an enviable position with little threat of competition.
“With high barriers to entry and few credible challengers, Rolls-Royce’s market position is strong,” Chiekrie said.
“The balance sheet is improving, free cash flow remains healthy, and the £1 billion buyback is nearly complete. All full-year guidance has been reiterated, but with a growing track record of overdelivering, don’t be surprised to see numbers to the upside at full-year results.”