Rolls-Royce shares rose 4% in early trading after the engine maker raised its full-year profit outlook, citing strong defence demand and an improved civil aftermarket performance. The company now expects underlying operating profit for the financial year to land between £4.7bn and £4.9bn, up from a previous estimate of £4bn to £4.2bn.
H1 results and financial performance
For the first half of 2026, Rolls-Royce reported a 46% leap in operating profit. The strong performance was driven by increased orders from defence customers and a recovery in the civil aerospace aftermarket. The company also completed £1.4bn of a planned £2.5bn share buyback scheme for 2026 and announced an interim dividend of 6p per share payable in September.
CEO comments and strategic outlook
Chief executive Tufan Erginbilgic said: “The actions that we have taken and investments we have made will drive significant profitable growth to the mid-term and beyond. A strong start to the year enables us to raise our guidance for 2026 despite the conflict in the Middle East.” He added: “Our transformation continues to deliver, and we are demonstrating that Rolls-Royce is now a very different company to that of the past. We have unlocked new growth opportunities across the group and created a resilient and diversified portfolio, with three strong businesses that can respond to changes in the external environment with agility and pace.”
Defence and submarine contracts
Rolls-Royce has established itself as a key supplier of engines for aircraft, submarines, and other power systems. Its technology has been earmarked for Dreadnought, the Royal Navy’s upcoming fleet of four nuclear-powered ballistic missile submarines. Last week, the company announced plans to build a £100m defence research and manufacturing hub in Filton near Bristol at Gypsy Patch Lane. The facility will design, assemble, and test engines for the defence industry and develop new products for future air combat.
Analyst and market reaction
Emily Sawicz, industrials senior analyst at RSM UK, commented: “In defence, Rolls’s development programme has been bolstered by orders from several NATO members including the UK and Canada. The uptick in UK spending set out in the Defence Investment Plan will provide the confidence for the business to invest, whilst supporting the UK supply chain.”
Share price momentum
Rolls-Royce shares have enjoyed a rebound in recent months, rising by around 40% over the past year. The stock also surged last week following the appointment of former defence minister John Healey as Chancellor. The raised outlook further boosted investor confidence, underscoring the company’s transformation under Erginbilgic’s leadership.
