Rolls-Royce reported a 50% jump in underlying operating profit to £1.7 billion in the first half of 2025. The operating margin rose to 19.1%, up from 14% last year. This increase shows the effect of strategic changes, smarter operations, and cost discipline.
- Revenue grew by 10.8% to £9.06 billion and free cash flow hit £1.58 billion, driven by higher profits and solid performance from long-term service agreements (LTSA).
- Its market value topped £90 billion for the first time, placing it among the top five firms in the FTSE 100.
CEO Tufan Erginbilgic, said:
“Our multi-year transformation continues to deliver. Our actions led to strong first half year results, despite the challenges of the supply chain and tariffs. We are continuing to expand the earnings and cash potential of Rolls-Royce.
We delivered continued strong operational and strategic progress in the first half of 2025. In Civil Aerospace, we achieved significant time on wing milestones and delivered improved aftermarket profitability. In Power Systems, where we now see further growth potential, we continued to capture profitable growth across data centres and governmental. In addition, Rolls-Royce SMR was selected as the sole provider of the UK’s first small modular reactor programme. We expect Rolls-Royce SMR to be profitable and free cash flow positive by 2030.”
Rolls-Royce Holdings PLC (RYCEY) Stock Performance
Rolls-Royce Holdings PLC has seen a strong comeback in 2025, following record profits. On July 31, Rolls-Royce reported a significant beat on its first-half operating profit and free cash flow, raising full-year forecasts. The company posted a 50% jump in operating profit to £1.7 billion and increased its guidance for 2025 operating profit to between £3.1 billion and £3.2 billion (up from a prior range of £2.7–£2.9 billion), and free cash flow to £3.0–£3.1 billion.
This strong performance was driven by:
- Substantial improvements in its civil aerospace business, with higher utilization and engine flying hours surpassing pre-pandemic levels.
- Growing power systems sales to data centers and government contracts.
- Robust order intake, particularly for large aircraft engines.
- Successful delivery on turnaround strategies set by the CEO, including enhanced profitability and margin expansion across divisions.
The jump reflected renewed investor confidence and belief that the company can sustain this growth trajectory. The day’s gain of about 10% made Rolls-Royce one of the top performers in major European indices and resulted in record share prices.
Analysts have praised the results. Shore Capital called them “excellent,” noting strong margins in Civil Aerospace. Morgan Stanley mentioned that the company’s guidance might be conservative, given the current momentum.
The firm also pleased investors by announcing an interim dividend of 4.5p per share, payable in September. Additionally, it completed £400 million of its planned £1 billion share buyback, boosting shareholder confidence.
The company raised its full-year forecast, now expecting £3.1 billion to £3.2 billion in profit and £3.0 billion to £3.1 billion in free cash flow.
SMRs Set to Power Rolls-Royce’s Nuclear Ambitions
The company’s clean energy vision centers on its Small Modular Reactor (SMR) program. It is making great progress and aims to be a global leader in SMRs.
Key SMR Developments:
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UK Government Deal: Rolls-Royce was selected by Great British Energy – Nuclear as the preferred bidder to develop Britain’s first SMRs, supported by £2.5 billion in public funding.
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Czech Republic Partnership: A partnership with ČEZ Group aims to deploy up to 3GW of clean energy in the Czech Republic, with more opportunities in Central Europe.
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Growing Nuclear Ties: The UK and Hungary are deepening cooperation, potentially opening more SMR opportunities.
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Technology Backing: Siemens Energy will supply steam turbines and generators, while Westinghouse is developing nuclear fuel for Rolls-Royce SMRs.
These collaborations enhance technical capabilities, lower costs, and support global SMR deployment.
Research and Supply Chain Push
Rolls-Royce is teaming up with the University of Sheffield’s AMRC. They aim to enhance modular manufacturing methods. This partnership will speed up production and lower costs for SMR.
As a member of the European Industrial Alliance on SMRs, Rolls-Royce collaborates with governments and industry to boost energy security and expand nuclear energy across Europe.
The company plans to form new utility partnerships in Asia and North America. It also aims to expand its supply chain with local engineering partners. There’s potential to link SMRs with energy storage and hydrogen. This could position them as a clean energy backbone for the future.
Rolls-Royce Aims Net Zero by 2050: Real Progress, Not Offsets
Rolls-Royce has made climate leadership a priority. It aims for net zero by 2050, not just in its operations but also across its products.
The company avoids relying on carbon offsets. Instead, it focuses on cutting emissions through innovation, efficient operations, and renewable fuels.
Here’s how it is cutting Scope 1 and 2 emissions from its operations:
It targets a 46% emissions cut by 2030, based on 2019 levels. The goal is to reach net zero emissions from its operations by 2050. This includes emissions from engine testing, which have increased due to higher development activity.
The company plans to use sustainable aviation fuel (SAF) in tests. They are shifting to clean power sources and installing batteries in locations like Friedrichshafen. Additionally, they are also buying renewable energy and focusing on efficiency improvements.
- In 2024, total Scope 1 and 2 emissions increased to 301 ktCO2e. This rise includes a 55 ktCO2e jump in test-related emissions.
- However, operational emissions dropped by 5 ktCO2e, a 3% decrease, which indicates progress.
Scope 3 Focus: Tackling Value Chain Emissions
Beyond direct emissions, Rolls-Royce is addressing Scope 3 emissions—especially from the use of its products (category 11) and purchased goods and services (category 1). These are major sources, with purchased goods accounting for 2.18 MtCO2e in 2024, around 2.5% of total emissions.
It is working with suppliers to set net zero targets, partnering with logistics firms for low-emission transport, and promoting resource efficiency to reduce waste.
Innovation for Cleaner Products
Rolls-Royce is investing significantly in future-ready, low-carbon products. They aim to ramp up their R&D spending on net-zero technologies by 75% this year.
Notable milestones include the UltraFan engine, a next-gen demonstrator with high fuel efficiency and SAF compatibility. All current in-production aero engines are certified to run on 100% sustainable aviation fuel. The company’s SMR projects aim to deliver scalable, clean electricity to national grids.
These projects are vital for its net-zero strategy and essential for decarbonizing the heavy industry and global aviation sectors.
All in all, Rolls-Royce demonstrates that climate action and financial growth can be mutually beneficial. From record profits to world-class clean tech investments, Rolls-Royce exemplifies how legacy companies can become climate leaders even without carbon credits. This approach helps create a responsible and profitable future.
