What's happened
Rolls-Royce reported a 40% increase in 2025 profits, driven by military aircraft orders and data centre power demand. The company expects higher profits and share buybacks through 2028, despite supply chain and tariff challenges, reflecting a successful transformation since 2023.
What's behind the headline?
The recent financial results highlight Rolls-Royce's successful transformation, with profits up 40% in 2025. The company’s focus on defence and data centre markets has proven highly profitable, especially as demand for military aircraft engines and power systems accelerates. The CEO’s cost-cutting and renegotiation strategies have been pivotal, enabling the company to navigate tariffs and supply chain issues effectively. The planned share buybacks and increased profit forecasts signal confidence in sustained growth. However, reliance on defence contracts and data centre demand exposes the company to geopolitical and technological risks. The decision to invest in nuclear projects and expand into new markets suggests a long-term strategic outlook, but execution risks remain. Overall, Rolls-Royce’s trajectory indicates a robust recovery, with the potential to significantly influence aerospace and power sectors in the coming years.
How we got here
Rolls-Royce's turnaround began in January 2023 under CEO Tufan Erginbilgic, who implemented cost cuts, renegotiated contracts, and expanded into power generation for data centres. The company’s recent growth is fueled by strong demand for military engines and power systems, alongside a strategic shift to capitalize on global trends like AI infrastructure.
Our analysis
The Independent reports that Rolls-Royce's profits soared by 40% in 2025, driven by military orders and data centre demand, with the company expecting profits to reach between £4.9bn and £5.2bn by 2028. CEO Tufan Erginbilgic credits the transformation plan launched in 2023 for this turnaround, emphasizing cost savings and strategic realignment. Reuters highlights the company's plans for a £7-9 billion share buyback over 2026-2028, and notes the impact of supply chain challenges and tariffs on its forecasts. Both sources agree that the company's recent performance is a result of strategic restructuring, with a focus on defence and power generation, and that it is now positioned for sustained growth. The Guardian emphasizes the significance of the profit increase and the company's commitment to shareholder returns, including a £2.5 billion buyback in 2025, and underscores the importance of the UK’s nuclear project in Wylfa, which Rolls-Royce expects to be profitable within five years. Overall, the coverage from all sources paints a picture of a company in robust recovery, leveraging new markets and strategic investments to secure future growth.
More on these topics
-
Rolls-Royce - Wikimedia disambiguation page
Rolls-Royce (always hyphenated) may refer to: Rolls-Royce Limited, a British manufacturer of cars and later aircraft engines, founded in 1906, now defunct
-
Ministry of Defence - Government department
The Ministry of Defence is the British government department responsible for implementing the defence policy set by Her Majesty's Government and is the headquarters of the British Armed Forces.
-
United States Department of War - Military
The United States Department of War, also called the War Department, was the United States Cabinet department originally responsible for the operation and maintenance of the United States Army, also bearing responsibility for naval affairs until the estab