Half Year 2026 Rolls-Royce Holdings PLC Earnings Call Transcript
Key Points
- Rolls-Royce Holdings PLC (RLLCF.PFD) delivered strong first-half results with a 46% increase in operating profit to GBP2.5 billion and a group operating margin of 22.5%, driven by strategic initiatives across all divisions.
- Civil Aerospace effectively eliminated AOGs for the first time in a decade, setting a new industry standard and providing significant operational benefits to customers.
- Power Systems saw a 72% increase in operating profit, driven by strong demand from data centers, with power generation OE revenues now expected to grow 25% per year to 2030.
- Defense operating margin improved to 21.0%, supported by strong aftermarket performance, profitable international sales, and cost efficiencies.
- Rolls-Royce SMR was selected in Sweden and signed contracts in the UK and Czech Republic, positioning the company as a global leader in small modular reactors with a clear order pipeline.
- Rolls-Royce Holdings PLC (RLLCF.PFD) faces a GBP150 million to GBP200 million cash headwind from supply chain challenges, including product cost inflation in rare earths and elementals.
- The company expects a lower contribution from commercial improvements in Civil Aerospace in the second half of 2026, as the high level of contract catch-ups is not sustainable.
- Large engine flying hours are expected to be at the lower end of the 115% to 120% range of 2019 levels, impacted by the Middle East conflict and fuel price cancellations.
- Net LTSA balance growth is expected to be below 2025 levels due to higher shop visits, more refurbs, and increased catch-ups, which reduce the balance.
- Cash tax costs are expected to rise by approximately GBP300 million for the full year due to higher profits, impacting free cash flow.
Good morning and welcome to our Half Year 2026 Results. I'm Jeremy Bragg. I'm Head of Investor Relations, and I'm joined today by our CEO, Tufan, and our CFO, Helen. So before we start today's presentation, I'm required to show you the Safe Harbour Statement on slide 2. So the full results materials can be downloaded from our website.
And before, sorry, in today's presentation, we will cover firstly our strategic and financial progress in the first half, the financial details of the results in detail, and our guidance for 2026. And after the presentation, there'll be time for questions both in the room and also online. So if you want to ask a question online, you need to do it via the online portal, and we'll allocate plenty of time for that.
So for those of you in the room, there are microphones in the seat in front of you, and you need to press and hold the button before you speak. So before handing you over to Tufan, we'd like to show you a short film that highlights some of the best of Rolls-Royce. Thank you.
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
