Rolls-Royce profit surges 40% on strong engines performance, data centre boom

Rolls-Royce has announced a dramatic surge in annual profits, with earnings climbing 40% to £3.46 billion in 2025, driven by robust performance across its aircraft engines, defence contracts, and booming demand for power systems in data centres.

The aerospace giant reported underlying operating profit of £3.46 billion for 2025, beating FactSet estimates of £3.32 billion, with an operating margin of 17.3%. Underlying revenue rose 12% to £20.1 billion .

It was the company’s fourth straight year of beating earnings expectations.

The Power Systems division emerged as a standout performer. The unit, which is benefitting from the mass build-out of data centers that rely on Rolls-Royce’s power generation system, generated £4.89 billion in revenue in 2025, reflecting an organic growth of 19% year-on-year.

Revenues from this segment increased by more than a third during 2025, creating a significant new revenue stream for the engineering powerhouse.

The company’s Civil Aerospace business—its largest revenue and profit driver—grew 15% compared to last year, while its defence unit expanded 8%. Major defence orders proved particularly instrumental, with Rolls-Royce securing contracts worth more than £1.5 billion with both the UK’s Ministry of Defence and the US Department of War.

CEO Tufan Erginbilgic highlighted on Thursday the possibility of the company returning to supplying narrow-body aircraft with engines, marking a potential strategic expansion beyond its current focus on wide-body planes.

Looking ahead, Rolls-Royce sees 2026 underlying operating profit of between £4 billion and £4.2 billion, above the midpoint of £3.65 billion as expected by analysts polled by FactSet.

Based on the strengthened 2025 performance, Rolls-Royce now expects underlying operating profits to increase to between £4.9 billion and £5.2 billion by 2028. This represents a significant upward revision from the previous target range of £3.6 billion to £3.9 billion.

The company also announced a multi-year buyback program of between £7 billion and £9 billion, citing a strong balance sheet.

“With our new capabilities and mindset, we have navigated challenges from supply chain to tariffs, and delivered a strong performance in 2025, all while we built the foundations for significant growth for years to come,” said Chief Executive Tufan Erginbilgic .

Erginbilgic emphasized that this growth trajectory would not have been possible before the company’s transformation, noting that Rolls-Royce has achieved approximately £600 million in cost savings since 2022.

Rolls-Royce shares have been on a tear over the past few years amid growth in all three of its businesses: civil aerospace, defense, and power systems. Over the past 12 months, the stock has more than doubled .

The transformation plan launched by Erginbilgic has included cutting costs and prioritizing core businesses, boosting investor confidence and positioning the company for sustained growth as it capitalizes on both defence spending increases and the explosive growth of AI-driven data centres requiring reliable backup power generation.