Rolls-Royce (RR) H1 2026 earnings summary

Executive summary

• Delivered significant operational and strategic progress in H1 2026, driven by transformation initiatives and business improvements, with elimination of AOGs in Civil Aerospace and robust growth across all divisions.

• Raised 2026 guidance for operating profit and free cash flow, reflecting increased confidence in mid-term targets.

• Announced interim dividend of 6.0p per share and continued share buyback program, with £1.4bn completed as of July 2026 and total shareholder returns expected to reach £3.4bn.

• All divisions—Civil Aerospace, Defence, and Power Systems—reported higher profitability, supported by commercial optimization, cost efficiencies, and strong demand.

• Resilient and diversified portfolio with substantial growth potential and robust capital returns.

Financial highlights

• Group revenues up 26% year-over-year to £11.3bn; operating profit up 46% to £2.5bn; operating margin increased to 22.5% from 19.1%.

• Free cash flow rose 24% to £2.0bn; net cash position at £2.1bn at half-year.

• Basic EPS up 41% to 22.17p; return on capital improved by 5.1 percentage points to 22%.

• Interim dividend of 6.0p per share declared.

• Liquidity position at £9.0bn.

Outlook and guidance

• 2026 underlying operating profit guidance raised to £4.9–5.2bn; free cash flow guidance raised to £5.0–5.3bn.

• Civil Aerospace expected to deliver 550–600 OE engines and 1,480–1,550 shop visits.

• Upgraded guidance driven by higher LTSA margins in Civil Aerospace, strong Power Systems profitability, and Defence aftermarket strength.

• Expect higher net investments and cash tax costs in the second half of the year.

• Majority of benefits from strategic initiatives, such as LTSA margin improvements, expected beyond 2028.