Rolls-Royce targets £2.5 billion in share buybacks during 2026
Key Facts
Rolls-Royce aims to complete £2.5 billion in share buybacks during 2026, the company said in its 2025 annual results, as part of a broader plan to return capital to shareholders. The company set the size of the multiyear plan at between £7 billion and £9 billion, spread over the period from 2026 to 2028. Management said during the annual results presentation: "This is the first multiyear share buyback programme in Rolls-Royce's history." The company had already completed a £1 billion share buyback programme during 2025. The target for the current year covers share purchases during 2026, while the broader plan extends to 2028.
Under a separate interim programme, Rolls-Royce completed the purchase of 15,971,931 shares during February 2026, according to its 2025 annual report's account of the programme's execution. The company paid £200 million for these shares, according to the same annual report. The announcement of the interim programme stipulated that shares purchased under it would be cancelled and identified capital reduction as the purpose of the purchases. Rolls-Royce said in the programme announcement: "They will be cancelled, and therefore the purpose of the programme is to reduce the company's share capital." The interim programme's purchases were thus accompanied by an announced mechanism for cancelling the repurchased shares, alongside disclosure of the amount paid and the number of shares upon completion.
On financial performance, Rolls-Royce reported an increase in underlying operating profit to £2,534 million in its first-half 2026 results. The company had recorded underlying operating profit of £1,733 million in the comparative period, according to the figures in the results announcement. The underlying operating margin also rose, reaching 22.5% in the first half, compared with 19.1% in the comparative period. The company attributed its improved performance to its strategic initiatives, identifying improved commercial terms and cost-efficiency gains among them. It used the phrase "benefits from improved commercial terms and cost efficiencies" when explaining the improvement accompanying the rise in underlying operating profit and margin in the period's results.
The financial improvement extended to cash flow, with Rolls-Royce's first-half free cash flow reaching £1,964 million, according to the company's results announcement for the period. Free cash flow in the comparative period was £1,582 million, a figure the company reported alongside the current first-half total. The same results included the announcement of an interim cash dividend for shareholders, alongside the group's announced share buyback plans. Rolls-Royce set the interim dividend at 6.0 pence per share and scheduled it for September in its first-half results announcement. The company's announcements on shareholder returns thus included a cash dividend per share as well as the amounts targeted for share purchases.
Against the backdrop of its financial position, Rolls-Royce said in its April trading update that Moody's and Fitch had upgraded its credit ratings, both with stable outlooks. The company said Moody's had raised its rating to A3, while Fitch had raised its rating to A-, according to the trading update announcing the upgrades. On spending on its facilities, Rolls-Royce announced a £300 million investment in the United Kingdom in September. The announced investment covers the company's manufacturing and engineering facilities across the United Kingdom, according to its statement on those facilities. In the announcement, Rolls-Royce described the spending as a "landmark £300 million investment in its manufacturing and engineering facilities".
For the full year 2026, Rolls-Royce raised its underlying operating profit guidance to a range of £4.7 billion to £4.9 billion, according to its first-half results announcement. It also raised its full-year free cash flow guidance to a range of £3.8 billion to £4.0 billion. The free cash flow guidance includes a cash impact related to the aerospace supply chain, which the company put at between £150 million and £200 million during 2026. Explaining this item, the company said its full-year guidance "includes a £150–200 million cash impact related to the aerospace supply chain". Rolls-Royce is scheduled to issue its next trading update on 12 November 2026, according to the date listed in the company's financial calendar.