Rolls-Royce posts soaring half-year profit amid defence and data centre boom

Rolls-Royce reported its underlying operating profit had risen by 46% to £2.5 billion year-on-year. The underlying operating margin stood at 22.5% with higher profitability in all divisions. Rolls-Royce also reported an interim dividend of 6.0p per share and net cash of £2.1 billion.

The company raised its full-year 2026 guidance: “We now expect £4.7bn-£4.9bn underlying operating profit and £3.8bn-£4.0bn free cash flow.”

Today represents another important milestone on our journey to transform Rolls-Royce into a high performing, competitive, resilient and growing business.

We made significant strategic progress, alongside delivering improved operational effectiveness and strong financial… pic.twitter.com/ZpRVvlcnoc

— Rolls-Royce (@RollsRoyce) July 30, 2026

Tufan Erginbilgic, CEO, said: “Our transformation continues to deliver, and we are demonstrating that Rolls-Royce is now a very different company to that of the past.”

He noted that in Civil Aerospace, Rolls-Royce has continued to improve its aftermarket profitability and “effectively eliminated aircraft on the ground.”

More improvements to engine durability

This year has seen three airlines, including LATAM Airlines, select Rolls-Royce’s new Trent 1000 XE engine for their Boeing 787 Dreamliners, with the company expecting the trend to continue. Rolls-Royce stated, “More campaigns are underway.”

The Trent 1000 had enjoyed around a third of the share of the Dreamliner engine orders early on, but it generated practically no new orders following durability issues with the engines. Some analysts had assessed that it was too late for Rolls-Royce to regain market share and expected the Trent 1000 to go out of production around 2030.

This time last year, Rolls-Royce credited increasing engine reliability for its soaring stock prices.

RR set to benefit from defence & AI booms

Rolls-Royce is poised to benefit from the large defence spending boom underway in Europe as well as in the United States and beyond.

The company is optimistic that its AE 3007 engine and new Orpheus engine families can benefit from the upcoming Increment 2 of the US Air Force’s CCA programme.

In the earnings call, Erginbilgic said it has continued to establish a “leading position in autonomous propulsion with several key milestones achieved in the period.”

CNBC reported that Rolls-Royce is deepening its exposure to the AI infrastructure boom. It wrote, “the British engineering group is forecasting that continuous power systems could account for as much as one-fifth of its power-generation business by 2030 as data centers struggle to secure grid connections.”

Rolls-Royce’s Erginbilgic said this week that the company is discussing power systems and small modular reactors with hyperscaler data centre operators.

He said that the company expects to sign another “big hyperscaler sort of deal,” adding, “We are already taking orders for data centres for [2028].”

In October 2022, Rolls-Royce’s market capitalization fell to £5.2 billion, and as of the time of writing, it stands at £121 billion.