Rolls-Royce has reported a strong start to 2026 across all three divisions, reaffirming its guidance for £4.0bn-£4.2bn of underlying operating profit and £3.6bn-£3.8bn of free cash flow, despite headwinds from the Middle East conflict.
Given the disruption the Middle East conflict has caused to air travel and the global economy generally, investors should be happy with today’s update from Rolls-Royce.
“We have had a strong start to the year driven by our transformation and self-help, as we continue to further expand the earnings, cash, and growth potential of the business,” said Chief Executive, Tufan Erginbilgic.
In Civil Aerospace, large engine flying hours grew 5% to 115% of 2019 pre-pandemic levels in Q1, with the group sticking to its full-year range of 115%-120%.
Encouragingly, Trent XWB flying hours among Middle Eastern airlines have fully recovered to pre-conflict levels, while growth elsewhere remains robust as capacity gets reallocated and operational performance improves.
Large-engine deliveries jumped 18% in the quarter, and shop visits rose 12%, with the total-service model giving management visibility to keep the shop-visit profile steady through 2026 and 2027.
Defence also had a good start to the year, with deliveries up more than 20% year-on-year as governments worldwide continue to ramp up spending amid escalating global conflicts.
Recent wins included EJ200 engines for Türkiye’s 20 new Eurofighter Typhoons via the EUROJET consortium and the selection of the MT30 marine gas turbine for up to 11 Australian Navy frigates. The first flight of the U.S. Navy’s MQ-25 autonomous refueller, powered by Rolls’ AE 3007 engine, highlights the group’s position in next-generation propulsion.
But Power Systems is arguably the standout growth story, especially on a percentage basis and what it could mean for the business in the future.
Power generation order intake in gas and diesel engines was around 50% higher year-on-year, led by data centres and governmental demand, with March a record month for orders and the backlog standing at £7.3bn at the end of Q1.
The SMR business has also moved into the execution phase, with contracts signed for three small modular reactors at Anglesey in Wales and with ČEZ, for the first of up to six units at Temelin in the Czech Republic, commercial terms agreed.
Rolls-Royce shares were 3% higher at the time of writing.