Rolls-Royce Reports 40% Profit Increase Amid Strong AI Datacentre Demand
Rolls-Royce’s profits surged by 40% in the past year as the engineering firm’s turnaround accelerated, supported by rising demand for power solutions from datacentres.
The company announced underlying profits of £3.5bn for 2025, up from £2.5bn the previous year. Additionally, Rolls-Royce committed to returning up to £9bn to shareholders over the next three years through share buybacks, marking its largest cash return to investors in a decade.
Since January 2023, when Tufan Erginbilgiç, a former BP executive, assumed the role of chief executive, the company has experienced a significant transformation. Upon taking charge, Erginbilgiç described the company as standing on a “burning platform.”
“We are consistently achieving outcomes that were not possible before our transformation.”
Under his leadership, Rolls-Royce has increased profits by cutting costs, renegotiating unprofitable contracts, and securing improved commercial terms with airline customers.
Power Systems Division Benefits from AI Datacentre Growth
The strong financial results announced on Thursday were partly driven by increased demand for power from datacentres, as technology firms rapidly expand infrastructure to support artificial intelligence applications. Rolls-Royce’s power systems division, which manufactures generators for these datacentres, saw profits rise 60% to £852m last year.
Civil Aerospace Remains Core Profit Driver
Despite growth in power systems, the majority of Rolls-Royce’s profits continue to stem from its civil aerospace segment, where demand for commercial jet engines remains robust. The company also generates revenue each time one of its engines operates in flight.
Last year, Rolls-Royce serviced a greater number of engines and benefited from enhanced contract terms, resulting in a 41% increase in profits from this division to £2.1bn.
The company also managed challenges related to the tariff dispute initiated by Donald Trump in 2025. Rolls-Royce was ultimately exempted from tariffs on its engines powering Boeing’s 787 passenger jet, following a US-UK trade agreement reached in May.
Outlook and Shareholder Returns
Erginbilgiç emphasized the ongoing momentum of the company’s recovery:
“Rolls-Royce’s turnaround continues with pace and intensity.”
The company has raised its profit forecast substantially, now anticipating an operating profit between £4.9bn and £5.2bn by 2028, approximately one-third higher than previous targets.
Rolls-Royce plans to return £2.5bn to shareholders in the current year alone, as part of the broader buyback strategy. The company completed its first share buyback in a decade last year, distributing £1bn to investors.
Small Nuclear Reactor Project and Market Response
In June last year, Rolls-Royce was selected to develop the UK’s first small nuclear reactors at Wylfa in north Wales, supported by £2.5bn in government funding. The company expressed confidence that this venture will become profitable within five years.
Following the announcement, Rolls-Royce shares increased by nearly 7% on Thursday morning, contributing to the FTSE 100 reaching a record high of 10,825 points, up 18 points or 0.15%.
