Rolls-Royce Launches $12 Billion Buyback, Raises 2028 Targets — Update

By Cristina Gallardo

Rolls-Royce increased shareholder returns with a multiyear share buyback program of up to around $12 billion and raised its targets for 2028 after earnings grew last year.

The U.K. engine maker said Thursday that its strong balance sheet allowed it to launch a buyback program of between 7 billion and 9 billion pounds ($9.49 billion-$12.20 billion) for 2026-2028, with 2.5 billion pounds of share repurchases to be completed this year.

This marks the second consecutive year in which Rolls-Royce has announced a buyback program, after a decade without any. Last year, the company bought back 1 billion pounds of shares.

Rolls-Royce also announced a dividend of 5 pence a share, which takes the total dividend for 2025 to 9.5 pence a share.

The buyback comes a month after President Trump issued an executive order aimed at tackling over-budget or delayed defense contracts. The order bans defense contractors from paying dividends or repurchasing shares "until such time as they are able to produce a superior product, on time and on budget."

Chief Executive Tufan Erginbilgic said Rolls-Royce is meeting the U.S. government's demand, and he doesn't expect the company's shareholder returns plans to impact its relationship with the U.S. administration.

Rolls-Royce produces engines for key U.S. defense department programs in the country, where it employs more than 6,000 people, with its main hub in Indianapolis.

"We have been investing in the U.S. If anything, we have excess capacity in Indianapolis," he told reporters. "I don't actually see any tension at all."

Underlying operating profit--a key metric for the group that strips out exceptional items--jumped by 40.65% to 3.46 billion pounds in 2025, Rolls-Royce said. Revenue on an underlying basis rose to 20.06 billion pounds, compared with 17.85 billion pounds in 2024, driven by its civil aerospace business and increasing power demand for data centers.

"Our transformation continues with pace and intensity," Erginbilgic said. "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."

Richard Hunter, head of markets at Interactive Investor, said any lingering doubts on Rolls-Royce's ambitions have been put to rest with the buyback announcement.

"There is nothing in this sparkling set of results which casts any immediate doubt either on the group's current ability to deliver, nor indeed its outlook over the coming years," he said.

Rolls-Royce, which makes engines for Airbus and Boeing aircraft as well as for submarines and the Eurofighter jet, expects to deliver full-year underlying operating profit of between 4 billion and 4.2 billion pounds in 2026.

Underlying operating profit should range between 4.9 billion and 5.2 billion pounds in 2028, Rolls-Royce said, up from a previous estimated range of between 3.6 billion and 3.9 billion pounds.

Bernstein analysts described the company's new targets for 2026 and 2028 as very strong, and said the upgrade to its midterm guidance beat market expectations. This should trigger significant earnings forecast upgrades, they added.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

February 26, 2026 04:35 ET (09:35 GMT)