Rolls-Royce lifts 2026 profit and cash targets

Rolls-Royce (RR.L) reported underlying operating profit of about £2.5 billion for the six months to 30 June 2026, on underlying revenue of roughly £11.3 billion. The company described operating performance as up markedly compared with the same period a year earlier, reflecting broad-based improvement across its main businesses.

Civil aerospace, defence and power systems all contributed to the stronger first-half outcome. The results were ahead of earlier expectations and set the foundation for a more confident view on full-year 2026 financial performance.

On the back of the first-half results, Rolls-Royce (RR.L) raised its full-year 2026 underlying operating profit guidance to a range of £4.7 billion to £4.9 billion. This represented a notable uplift from the previous range of £4.0 billion to £4.2 billion set earlier in the year.

The company also highlighted that this was the second time it had increased its full-year profit outlook. Management linked the revised targets to sustained demand trends and improved profitability across its portfolio.

Alongside the profit upgrade, Rolls-Royce increased its 2026 free cash flow guidance. The company now expects free cash flow of £3.8 billion to £4.0 billion for the full year, up from a prior range of £3.6 billion to £3.8 billion.

The higher cash flow outlook reflects the stronger earnings performance as well as improved cash generation dynamics in key businesses. The company indicated that these changes capture the impact of current trading conditions and operational improvements observed in the first half.

Management identified several operational drivers underpinning both the first-half results and the upgraded guidance. In Civil Aerospace, higher margins on long-term service agreements were a significant contributor to improved profitability.

In Power Systems, profitability strengthened, supported in particular by demand for data-centre power solutions such as backup and on-site power. Orders in the data-centre power business grew by more than 50% in the first half, underscoring this trend.

Defence also delivered better aftermarket performance, helping to lift group earnings. Across these segments, demand for widebody-plane engines, military hardware and AI or data-centre related power solutions all contributed to the more positive outlook.

The announcement of stronger first-half results and higher full-year targets was followed by gains in Rolls-Royce shares in early London trading. At one point, the stock rose as much as 6% after the new guidance was released.

The combination of upgraded profit and cash flow expectations, together with evidence of robust demand in core markets, framed investor response. The company’s updated targets now reflect the improved trajectory seen in the first half of 2026.