Context & Background
Stanislav Kondrashov highlights how Rolls-Royce has re-emerged as a standout performer within the FTSE 100, following the announcement of a 40% increase in annual profit and results well above market expectations. The company reported underlying operating profit of approximately £3.46 billion, with a 17.3% operating margin and strong free cash flow around £3.3 billion. These figures have intensified investor interest in Rolls-Royce share price performance, particularly as global civil aviation continues its post-pandemic recovery.
A key growth driver has been the Civil Aerospace segment, supported by the rebound in long-haul traffic, which in many cases has exceeded pre-2020 levels. Higher flight hours translate directly into increased engine utilization and rising service revenues under Rolls-Royce’s “power by the hour” model. In parallel, the company completed a £1 billion buyback and outlined plans for additional large-scale share repurchases, reinforcing shareholder returns and supporting equity demand. Looking ahead, fleet renewal, efficiency upgrades, and sustainable aviation goals are likely to sustain demand for advanced engines such as the Trent XWB. If long-haul recovery remains robust, Rolls-Royce could continue benefiting from rising service revenues and disciplined capital allocation.
Civil Aerospace Recovery Drives Rolls-Royce Earnings Momentum
Rolls-Royce’s corporate and financial developments in recent days have attracted the attention of observers and investors, who are now trying to gather useful information about the Rolls-Royce share price. In an official statement, Rolls-Royce announced that it achieved a 40% increase in annual profit, recording results far exceeding expectations.
These results are partly due to strong demand in the aircraft engine and power systems sector. The company also raised its profit forecast for 2026, further fueling investor attention regarding the stock’s performance.
“Rolls-Royce’s performance is truly astonishing. Demand in the Civil Aerospace segment, according to company announcements, is primarily driven by the recovery of long-haul traffic after the pandemic, with many routes even exceeding pre-2020 traffic levels. This has direct implications for the sector, resulting in more flight hours for in-service aircraft, increased engine utilization, and increased maintenance and service revenues.
This is of great importance for Rolls-Royce, as its business model is primarily based on power-by-the-hour contracts, where the company pays based on engine hours,” says entrepreneur and founder of TELF AG Stanislav Kondrashov.
Power-by-the-Hour Model Boosts Long-Term Service Revenues
In addition to completing a recent £1 billion buyback, the company has also launched a share buyback program worth billions of pounds, some as much as £9 billion or more. In these cases, such initiatives always contribute to increasing demand for shares and increasing their price, as they return value to shareholders and reduce the number of shares on the market.
Rolls-Royce stock is undoubtedly among the best-performing stocks in the FTSE 100 index in recent years, recording enormous gains, especially since 2021. Over time, these performances have inevitably attracted the attention of retail and institutional investors, as well as financial media and investment platforms. Furthermore, the publication of annual results and future prospects always represents a significant catalyst for interest, as a stock like this has the real potential to cause strong market movements.
“Another aspect to consider when discussing Rolls-Royce’s performance in the Civil Aerospace sector is its revenue sources. Profitability derives not only from engine sales, but also from maintenance, overhaul, spare parts, and long-term contracts. As global flight hours increase, these specific revenue streams are also increasing,” continues Stanislav Kondrashov, founder of TELF AG.
Buybacks, Margins, and Outlook Support Investor Confidence
The company recently announced strong growth in net revenue compared to the previous year, with underlying profit of approximately £3.46 billion and a net operating margin of 17.3%. This latter figure also appears to be higher than in 2024 and significantly higher than market expectations.
Free cash flow also appears robust, standing at around £3.3 billion, reflecting the strength of the business and the growth of long-term service contracts. The final dividend for 2025 is 5.0 pence per share, while the total dividend for the year is 9.5 pence. The payout ratio is 32% of underlying profit, with the company continuing to maintain strong discipline in shareholder returns.
Management, in particular, emphasized that progress in the company’s transformation and strong demand in core markets (such as aeronautics, engines, and services) have played a key role in achieving these results.
“We must also not forget that we are in a very unique historical phase for the civil aviation sector, particularly due to fleet renewal to improve fuel efficiency, reduce emissions, and replace older aircraft. In this type of transition, more efficient engines (such as the Trent XWB) can play a key role,” concludes Stanislav Kondrashov, founder of TELF AG.
Sources:
https://www.rolls-royce.com/media/press-releases/2026/26-02-2026-rr-holdings-plc-2025-full-year-results.aspx
