- Rolls-Royce kept its 2026 guidance of £4.7 billion to £4.9 billion underlying operating profit and £3.8 billion to £4.0 billion free cash flow, saying it has 'further confidence' in the ranges it raised in July [1][3].
- It launched a £1.5 billion interim buyback running to Feb. 23, 2027, on top of the £2.5 billion 2026 program, of which £2.4 billion is done, as part of its £7 billion to £9 billion plan for 2026 to 2028 [1][2].
- Large engine flying hours rose 4% year on year in the first 10 months to 114% of 2019 levels; the full year is still expected towards the lower end of 115% to 120% [1].
- Power Systems order intake rose 62% in nine months to a record £8.6 billion backlog; gas engine orders nearly tripled on prime power demand from data centers [1].
- The company is finalising a significant multi-year contract to supply backup engines to a hyperscaler, with a framework agreement extending to 2031, and will revisit its mid-term targets at full-year results on Feb. 25 [1].
Rolls-Royce said on Thursday it has growing confidence in its 2026 profit and cash targets and will hand back cash to shareholders faster, launching a £1.5 billion interim share buyback [1]. The UK maker of widebody jet engines, defence engines and mtu generators reiterated guidance of £4.7 billion to £4.9 billion of underlying operating profit and £3.8 billion to £4.0 billion of free cash flow, the ranges it raised in July from £4.0 billion to £4.2 billion and £3.6 billion to £3.8 billion [1][3].
The most striking numbers came from Power Systems, which makes engines and generator sets used for data center power. Order intake rose 62% in the first nine months, gas engine orders for power generation nearly tripled on prime power demand from data centers, and the company said it is finalising a significant multi-year contract to supply backup engines to a hyperscaler, alongside a framework agreement running to 2031 [1]. It did not name the customer.
Guidance and buybacks
For comparison, Rolls-Royce made £3.46 billion of underlying operating profit on £20.1 billion of underlying revenue in 2025, so the guidance implies profit growth of roughly 36% to 42% this year [2]. In the first half it earned £2.5 billion of underlying operating profit at a 22.5% margin and generated £2.0 billion of free cash flow [3].
The new £1.5 billion buyback is irrevocable and non-discretionary, run by UBS, and will be completed no later than Feb. 23, 2027, ahead of full-year results [2]. It comes on top of the £2.5 billion of buybacks for 2026, of which £2.4 billion has been completed, and forms part of the £7 billion to £9 billion program for 2026 to 2028 [2]. Chief executive Tufan Erginbilgic said the move reflects 'our continued confidence in sustainable free cash flow growth driven by our transformation' [1]. The company said it will revisit its mid-term targets at its full-year results on Feb. 25, 2027 [1].
Civil Aerospace: flying hours lag, backlog grows
Large engine flying hours, which drive Rolls-Royce's service revenue because airlines pay per hour flown, grew 4% year on year in the first 10 months to 114% of 2019 levels, up from 113% at the half year [1]. Rolls-Royce still expects the full year towards the lower end of its 115% to 120% range [1]. Hours from Middle Eastern airlines are above pre-conflict levels, but other regions have been hit by capacity cuts tied to high fuel prices, which the company expects to reverse when fuel prices fall [1].
The large engine order backlog has grown to around 2,500 engines, including 70 Trent 7000s for Avolon and 22 for Cathay Group in the second half [1]. Deliveries to aircraft makers and major shop visits are significantly higher than a year ago, with full-year guidance for both unchanged [1]. The Airbus A350F freighter, powered only by the Trent XWB-97, made its first flight in September [1].
Power Systems, SMRs and why US investors care
Power Systems' backlog reached a record £8.6 billion at the end of September, up from £8.0 billion at the half year [1]. Rolls-Royce targets annual original-equipment revenue growth of 25% in power generation through 2030, and in July it opened a site in Mankato, Minnesota, that more than doubles production capacity for its mtu Series 4000 generator sets [1]. That puts it in direct competition with US suppliers for data center power: Caterpillar's gas generators and Cummins, whose data center power business lifted margins to a record, are chasing the same hyperscaler orders, while Siemens Energy sells the larger gas turbines.
In civil aerospace, Rolls-Royce's closest listed peer is GE Aerospace, which also earns most of its profit from servicing engines in flight, so flying-hour trends at one read across to the other. US investors can hold Rolls-Royce through its ADR, RYCEY [2]. In defence, it opened new test cells in Indiana, the culmination of a decade-long $1 billion investment to support the B-52 re-engine, MQ-25A Stingray and MV-75 Cheyenne programs [1].
Rolls-Royce SMR, its small modular reactor unit, expanded its Czech partnership with ČEZ to three sites in July, showing a route to six reactors and up to 3 GW, launched a £1.4 billion UK supplier program in September, and expects to announce the site of its first UK factory in the coming months [1]. S&P Global upgraded Rolls-Royce to an A- credit rating in September [1].
Further sources
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