Rolls-Royce stock surged more than 10% on Wednesday after the company raised its full-year profit forecast, signaling a strong recovery in its civil aerospace and power systems business. The boost sent shares to an all-time high, pushing the company’s market value beyond £90 billion.
The UK engineering giant now expects operating profit for 2025 to reach £3.2 billion, up from its earlier forecast of £2.8 billion. Free cash flow guidance also rose by £200 million, now projected at £3.1 billion. The upward revision came after Rolls-Royce reported an impressive £1.7 billion in operating profit for the first half of the year, compared to £1.1 billion during the same period in 2024.
CEO Tufan Erginbilgic attributed the performance to gains in engine efficiency and operational discipline. He noted that Rolls-Royce engines are staying longer “on-wing” before needing servicing, a critical improvement for airlines aiming to cut maintenance costs and boost uptime.
The company’s Trent engines, which power wide-body aircraft, have become more durable, driving growth in long-term service contracts. Rolls-Royce aims to extend engine operating time by more than 80% by 2027, which could significantly raise its maintenance-related income over the coming years.
The power systems division also delivered strong results, benefiting from rising demand from data centres, industrial sectors, and government clients. Meanwhile, the defense segment held steady, supporting continued momentum in overall revenue and margins.
Investors responded enthusiastically. Rolls-Royce shares crossed the symbolic 1,000-pence mark for the first time, reflecting renewed investor confidence. The stock has now climbed over 70% year-to-date, far outpacing the broader FTSE 100 index.
This sharp rise in valuation follows a broader transformation plan that began in 2023, when Erginbilgic took over as CEO. Under his leadership, Rolls-Royce has focused on restructuring legacy contracts, cutting costs, and investing in next-generation technologies, including its push into small modular nuclear reactors (SMRs). The UK government’s support for Rolls-Royce’s SMR program adds another long-term growth lever for the company.
Industry analysts suggest the upgrade strengthens Rolls-Royce’s long-term investment case, especially as air travel rebounds and demand for efficient, wide-body aircraft engines accelerates. The strong results also position the company to weather inflationary pressures and global supply chain challenges.
As the second half of 2025 begins, Rolls-Royce is expected to continue its upward trajectory, driven by a mix of innovation, government contracts, and rising demand across civil and defense aviation.
Key Highlights:
- Rolls-Royce raised its 2025 profit forecast to £3.2 billion.
- Free cash flow target increased to £3.1 billion.
- First-half profit hit £1.7 billion with improved engine efficiency.
- Shares jumped over 10%, crossing 1,000-pence milestone.
- Power systems and defense divisions added to strong performance.
- Government support for nuclear projects boosts long-term prospects.
