Shares in Rolls-Royce jumped by over 6% in early trading to an all-time high after the engineering firm increased its mid-term operating profit guidance.

The FTSE 100 company described 2025 as "another year of strong strategic and financial delivery", with significant improvements across all financial metrics.

In the year to 31 December, its underlying revenue increased by 12% to £20bn, while its operating profit jumped by 40% to £3.4bn.

Furthermore, Rolls-Royce recorded a 46% increase in its underlying profit before tax to just over £3.3bn.

The firm said that over the past three years, its transformation programme has delivered a "step-change in performance", as it continues to transform the business into a "high-performing, competitive, resilience and growing business".

Chief executive officer at Rolls-Royce, Tufan Erginbilgic, stated: "Our transformation continues with pace and intensity. We are consistently achieving outcomes that were not possible before our transformation. 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.”

Based on its 2026 guidance, Rolls-Royce expects to deliver its mid-term operating profit guidance two years earlier than planned.

As a result, underlying operating profit guidance has been upgraded from a range of £3.6bn and £3.9bn to between £4.9bn to £5.2bn.

Furthermore, its free cash flow guidance range has been lifted from between £4.2bn and £4.5bn to between £5bn and £5.3bn.

This guidance is supported by Rolls-Royce’s businesses benefiting from key global trends.

Head of markets at AJ Bell, Dan Coatsworth, described Rolls-Royce’s performance as "one of the most impressive business turnarounds in decades".

He concluded: "Not simply fixing a few broken doors, Rolls-Royce has sorted out its problems and then taken the business to another level. It is rare to pull off such a stunt so smoothly and without bumps in the road.

"Investors are jumping for joy at the gains they’ve made in recent years, but one must question why Rolls-Royce is still ploughing billions of pounds into share buybacks when the stock is on a premium rating. Trading on close to 40 times forward earnings is a rating richer than a chocolate torte. It is common sense that companies should be buying back stock when it is cheap, not expensive.

"Investors might not care if Rolls-Royce continues to deliver strong business performance and large amounts of cash flow. They’ll be delighted the engineer is not only getting more out of its existing operations, but it is also embracing lots of new opportunities. The fact it is confident enough to upgrade mid-term targets just goes to show how Rolls-Royce is in full health. That raises expectations for the business and means there is no margin for error."

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