All eyes are on Rolls-Royce Holdings Plc as it prepares to release its full-year 2025 results tomorrow. Market anticipation is exceptionally high, fueled by a recent report suggesting the British engineering giant is set to unveil a substantial share buyback program. According to a Sky News article from February 22, the company could announce a repurchase plan worth up to £1.5 billion, a significant increase from the £1 billion program executed the previous year. While Reuters noted it could not independently verify the report and the company declined to comment, such a move would signal a powerful vote of confidence in the firm’s ongoing transformation and its strengthened financial position.
Financial Performance Exceeds Elevated Guidance
The foundation for this potential capital return is a year of robust financial performance. In July 2025, Rolls-Royce raised its annual targets, forecasting underlying operating profit between £3.1 billion and £3.2 billion, with free cash flow projected at £3.0 billion to £3.1 billion. Management confirmed in November that business trends remained consistent with these heightened expectations.
Notably, analyst consensus has now surpassed the company’s own guidance—a pattern that has repeated over recent quarters. CNBC reported that market experts collectively predict even stronger results. Analysts at Agency Partners suggested in a client note that it would be surprising if the company did not modestly exceed its official forecast. RBC Capital Markets observed that the current consensus for 2026 operating profit already reaches the mid-term target range the company set for 2028, implying the February 2025 goals could be obsolete within a year.
First-Half 2025 Results Underpin Confidence
The soaring expectations are grounded in a powerful first-half 2025 performance. The group reported a 50% surge in underlying operating profit to £1.7 billion. The Civil Aerospace division was a standout, generating £1.2 billion in operating profit—a 63% increase, achieving a margin of nearly 25%.
A key driver was the 28% growth in the large engine aftermarket business. Flight hours for Large Engines have already recovered to pre-pandemic levels. Furthermore, Rolls-Royce is benefiting from supply chain constraints at Airbus and Boeing, which are delaying new aircraft deliveries and extending the service life of older planes equipped with its engines.
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The Power Systems unit also showed impressive growth, with revenue climbing 20% to £2 billion. This was largely propelled by soaring demand from the data center sector, where order intake jumped 85% and revenue increased by 45%.
Defense and Nuclear Ventures Provide Long-Term Growth Engines
Looking ahead, the Defense division is positioned to benefit from rising global military expenditures. Rolls-Royce shares hit a record high last week following reports that the UK government might accelerate plans to raise its defense budget to 3% of GDP.
In a significant development for future revenue streams, the UK government selected a Rolls-Royce-led consortium in June 2025 to build three nuclear power plants utilizing Small Modular Reactor (SMR) technology. The company has also secured interest from the Czech Republic for its SMRs and is participating in a selection process in Sweden.
When the markets open tomorrow, investor focus will center on three critical announcements: the official confirmation and scale of the share buyback program, the final 2025 results versus the upgraded guidance, and, crucially, any new mid-term targets or an outlook for 2026. This comes after a remarkable period for the stock, which has more than doubled in value over the past twelve months.
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