Rolls-Royce Holdings has delivered an outstanding set of full-year results for 2025, with underlying operating profit jumping 40% to £3.5bn and margins climbing to 17.3%, up from 13.8% a year earlier.
Rolls-Royce is the gift that keeps on giving for investors who are being rewarded for ongoing operational strength and top-line growth.
Shares powered higher on Thursday after the engineering giant announced a multi-year share buyback programme worth £7bn to £9bn over the 2026–2028 period, underscoring management’s confidence in the business’s trajectory.
The company completed a £1bn buyback in 2025, its first in a decade, and has already returned £200m to shareholders in the opening weeks of 2026. Free cash flow still rose to £3.3bn from £2.4bn.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown, said: “Rolls-Royce delivered a blockbuster set of results, with full-year profits flying past expectations largely due to a much better-than-expected performance from its Power Systems division.
“Here, growth continues to be driven by data centre customers looking for power while awaiting grid connection. 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.
“Strong demand in its Civil Aerospace business remains a running theme. The division’s 15% revenue growth continues to be boosted by the upward trend in large engine flying hours, which are now cruising at 111% of pre-pandemic levels. Rolls also has exposure to the defence sector, making up around 25% of group revenue. Given the current elevated-threat environment, defence budgets across many countries are on the rise. With positions in combat aircraft and nuclear submarines, Rolls-Royce looks well-placed to capture some of the increased spending.”
As Chiekrie highlights, Civil Aerospace was the star performer, delivering a 20.5% operating margin compared with 16.6% in 2024, driven by stronger aftermarket activity. Large engine flying hours grew 8% year-on-year. The explosion in global demand for air travel means investors should look forward to further growth in the years ahead.
Power Systems posted a margin of 17.4%, up sharply from 13.1%, as the division captured growth in data centre power generation and governmental work. The data centre business is an area to watch, with Rolls-Royce becoming a direct beneficiary of AI’s growth.
Defence held broadly steady at a 14.4% margin, up marginally from 14.2%, with stronger transport and combat performance offsetting the absence of a one-off submarine benefit from the prior year.
The board declared a final dividend of 5.0p per share, bringing the total 2025 payout to 9.5p — a 32% payout ratio of underlying profit after tax. It marks the first time Rolls-Royce has paid a dividend in more than five years.
Rolls-Royce shares were 6% higher at the time of writing at 1,389p.