Rolls-Royce Raises 2026 Guidance Following Strong Half-Year Performance

The Tip Desk · July 30, 2026 · 1 min read

Underlying operating profit rose 46% to £2.5bn in the first half of 2026, driven by strategic transformation and growth across all divisions.

Rolls-Royce Holdings Plc has raised its full-year 2026 guidance, now expecting underlying operating profit of £4.7bn to £4.9bn and free cash flow of £3.8bn to £4.0bn. This outlook comes despite an uncertain external environment and the impact of conflict in the Middle East [4, 7].

For the half-year ended 30 June 2026, the Group reported underlying operating profit of £2.5bn, a 46% increase from £1.7bn in the prior period [4, 12]. The underlying operating margin improved to 22.5% from 19.1%. Profitability grew across all three divisions: Civil Aerospace reported an underlying operating margin of 25.3%, Defence reached 21.0%, and Power Systems reported 20.3%.

Free cash flow for the period was £2.0bn, compared to £1.6bn in H1 2025. This growth was primarily driven by stronger underlying operating profit, though it was partially offset by higher cash tax costs, higher net investments, and lower LTSA balance growth.

The company's liquidity position stood at £9.0bn as of 30 June 2026, with net cash increasing to £2.1bn. During the period, the Group repaid £1.1bn of bonds from cash and issued €1bn of bonds maturing in 2031 and 2036. Credit rating agencies also recognized this progress, with Moody's and Fitch upgrading the company to A3 and A-, respectively, while S&P Global moved its outlook to positive.

Regarding shareholder returns, Rolls-Royce announced an interim dividend of 6.0p per share to be paid in September [4, 6]. Additionally, the company has completed £1.4bn of its planned £2.5bn share buyback for 2026, as part of a larger multi-year programme totaling £7bn to £9bn between 2026 and 2028 [4, 12].