Rolls-Royce set out its strategy and mid-term targets in November 2023, and has raised the targets since. The latest, from February 2026, are for 2028. The strategy has four pillars, and each of the three divisions, Civil Aerospace, Defence, and Power Systems, has its own margin target.
Updated 27 September 2026
Multi-year transformation programme
Our multi-year transformation programme is turning Rolls-Royce into a high-performing, competitive, resilient and growing company
Mid-term targets for 2028
Figures for 2025 and the first half of 2026.
Underlying operating profit of £4.9 billion to £5.2 billion
£3.5 billion in 2025. In July 2026, Rolls-Royce raised its 2026 guidance to £4.7 billion to £4.9 billion.,
Underlying operating margin of 18% to 20%
17.3% in 2025, and 22.5% in the first half of 2026.,
Free cash flow of £5.0 billion to £5.3 billion
£3.3 billion in 2025. The 2026 guidance is £3.8 billion to £4.0 billion.,
Return on capital of 23% to 26%
£7 billion to £9 billion of share buybacks across 2026 to 2028
£1.4 billion of the £2.5 billion planned for 2026 bought back by the end of July 2026.
£1.4bn of £2.5bn in 2026
Portfolio choices and partnerships
Grow the parts of the business where Rolls-Royce already has a strong market position and a distinctive product.
Set out in November 2023
- Re-enter the narrowbody engine market through a partnership.
- Exit Rolls-Royce Electrical, either soon or by first cutting the holding to a minority stake.
- Sell businesses for £1.0 billion to £1.5 billion of gross proceeds over five years.
Since then
- ČEZ Group invested in Rolls-Royce SMR, and committed to up to six units in the Czech Republic.
- BAESL, a joint venture with Air China, opened in December 2025 to overhaul up to 250 Trent engines a year by the mid-2030s.
Strategic initiatives
Deepen Rolls-Royce’s advantage in widebody engines, business aviation, combat and transport aircraft, and mobile and stationary power systems.
Set out in November 2023
- Raise the Civil Aerospace margin to 15% to 17%, from 2.5% in 2022.
- Raise the Defence margin to 14% to 16%, from 11.8% in 2022.
- Raise the Power Systems margin to 12% to 14%, from 8.4% in 2022.
Since then
- Margins in 2025 were 20.5% in Civil Aerospace, 14.4% in Defence, and 17.4% in Power Systems.
- The new mid-term margin targets are 21% to 23% for Civil Aerospace, 14% to 16% for Defence, and 18% to 20% for Power Systems.
- Rolls-Royce now aims to more than double the durability of its in-production Trent engines by the end of 2027, and had delivered more than half of that by February 2026.
Efficiency and simplification
A simpler organisation, better buying across the Group, and tighter planning and budgeting.
Set out in November 2023
- Save £400 million to £500 million in the mid-term.
- Buy better across the whole Group, and plan and budget more tightly.
Since then
- £0.6 billion saved since the start of 2022, above the £0.5 billion target for the end of 2025.
- £1.2 billion of gross third-party procurement savings since the start of 2022, above the £1.0 billion target for the end of 2025.
Lower carbon and digitally enabled businesses
Take part in the energy transition, for Rolls-Royce and its customers, in growing markets where it can win.
Set out in November 2023
- Develop small modular reactors (SMRs) with a broad set of partners.
Since then
- In June 2025, Great British Energy - Nuclear chose Rolls-Royce SMR as the sole provider of three SMRs in the UK.
- In November 2025, Wylfa on Anglesey was confirmed as the site for those three SMRs.
- Videberg Kraft chose Rolls-Royce SMR to supply three SMRs in Sweden.
Rolls-Royce raised its targets as the results came in.
The first mid-term targets, set in November 2023, were for 2027. By February 2026, Rolls-Royce expected to reach the old profit range two years early, and set higher targets for 2028. We recommend raising a target once it is clearly going to be passed, so the plan still asks something of the company.
Each division has its own margin target.
Civil Aerospace, Defence, and Power Systems each have a margin range, as well as the Group. Each division’s result can be judged on its own. We recommend splitting a company-wide target by team whenever each team can move its own part of it.
Every target is a range.
Profit, margin, free cash flow, and return on capital are all ranges, such as £4.9 billion to £5.2 billion. We recommend a range for any target that depends on markets you do not control: it shows what counts as on target without pretending to know the exact figure.
Sources
- 1. Rolls-Royce Holdings plc (2023). Rolls-Royce targets a step change in mid-term performance. Press release, Capital Markets Day, 28 November 2023. rolls-royce.com
- 2. Rolls-Royce Holdings plc (2026). Our strategy. Company website, accessed 27 September 2026. rolls-royce.com
- 3. Rolls-Royce Holdings plc (2026). Rolls-Royce Holdings plc 2025 full year results. Results announcement, 26 February 2026. rolls-royce.com
- 4. Rolls-Royce Holdings plc (2026). Rolls-Royce Holdings plc 2026 half year results. Results announcement, 30 July 2026. rolls-royce.com
Headwater is not connected with Rolls-Royce Holdings plc. Rolls-Royce and Trent are trade marks of their owners.
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