Rolls-Royce reported first-half underlying operating profit of £2.5 billion ($3.3 billion) on Thursday, a 46% increase from a year earlier, and raised its full-year guidance as demand grew across its civil aerospace, defense, and power systems divisions.
Revenue for the first six months of the year rose 24% to £11.3 billion, the company said
For the full year, Rolls-Royce lifted its underlying operating profit target to a range of £4.7 billion to £4.9 billion, compared with the previous £4 billion to £4.2 billion range, and set a new free cash flow forecast of £3.8 billion to £4 billion, above the earlier £3.6 billion to £3.8 billion outlook. The results reflect Rolls-Royce’s growing exposure to two major global spending cycles. In the first six months of the year, the defense unit delivered organic revenue gains of 17% alongside a 57% jump in underlying profits.
Power systems, which includes engines for data centers, grew organic revenue 28% and profits 72%. CEO Tufan Erginbilgic said the company has been in discussions with major data center operators about power systems and small modular reactors. “Early next week, in [the] investment committee, we are going to sign another big hyperscaler sort of deal,” Erginbilgic told CNBC. “We are already taking orders for data centers for [2028].” Where Rolls-Royce once focused on standby generators kept in reserve for outages, the company is now fielding demand from data centers that need engines running at all times, given how hard it has become to secure utility grid access. The upshot for Rolls-Royce is a larger volume of engine orders paired with long-duration service contracts.