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Rolls-Royce

Multi-year transformation programme, 2023 to 2028

Our multi-year transformation programme is turning Rolls-Royce into a high-performing, competitive, resilient and growing company
Rolls-Royce’s vision

Multi-year transformation programme

Rolls-Royce set out its strategy and mid-term targets in November 2023, and has raised the targets twice 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.

Portfolio choices and partnerships

Grow the parts of the business where Rolls-Royce already has a strong market position and a distinctive product.

  • 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.
  • 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.
  • The naval propulsors business was sold to Fairbanks Morse Defense in July 2025.

Strategic initiatives

Deepen Rolls-Royce’s advantage in widebody engines, business aviation, combat and transport aircraft, and mobile and stationary power systems.

  • 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.
  • 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

  • Save £400 million to £500 million in the mid-term.
  • Buy better across the whole Group, and plan and budget more tightly.
Efficiency and simplificationTarget £0.5bn
£0.6bn
Third-party procurement, grossTarget £1.0bn
£1.2bn

Since the start of 2022, against targets 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.

  • Develop small modular reactors (SMRs) with a broad set of partners.
  • 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 has raised its targets twice

Rolls-Royce set its first mid-term targets in November 2023, for 2027. It raised them in February 2025 and again in February 2026, both times for 2028, each time expecting to reach the new range early.,,

0£1bn£2bn£3bn£4bn£5bn£6bnNov 2023Feb 2025Feb 2026Target for 2028: £4.9bn to £5.2bn£4.7bn–£4.9bn£0.65bn£1.6bn£2.5bn£3.5bn2022202320242025202620272028
Operating profit
£4.9bn to £5.2bn by 2028
Free cash flow
£5bn to £5.3bn by 2028
Operating margin
18% to 20% by 2028
Return on capital
23% to 26% by 2028

The targets as they stood in July 2026.

A margin target for each division

Each division’s underlying operating margin is shown against its own mid-term range, as the range stood when the year was reported.,,,,

Civil Aerospace

Target 21% to 23%

Defence

Target 14% to 16%

Power Systems

Target 18% to 20%

Rolls-Royce SMR has been chosen in three countries

Rolls-Royce SMR is part of the lower-carbon pillar. It has been chosen in the UK, the Czech Republic, and Sweden, and Rolls-Royce says it has won every competitive European nuclear tender so far.

Up to 12

units ordered or selected

United Kingdom

3 units for Great British Energy – Nuclear

Chosen as sole provider in June 2025. The three units will be built at Wylfa on Anglesey, a site with room for eight.

Czech Republic

Up to 6 units for ČEZ Group

ČEZ invested in Rolls-Royce SMR and committed to up to six units. Work has begun at the Temelín site.

Sweden

3 units for Videberg Kraft

Selected in 2026 to supply three units.

  1. 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.

  2. 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.

  3. 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. 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. 2. Rolls-Royce Holdings plc (2026). Our strategy. Company website, accessed 28 September 2026. rolls-royce.com
  3. 3. Rolls-Royce Holdings plc (2024). Rolls-Royce Holdings plc 2023 full year results. Results announcement, 22 February 2024. rolls-royce.com
  4. 4. Rolls-Royce Holdings plc (2025). Rolls-Royce Holdings plc 2024 full year results. Results announcement, 27 February 2025. rolls-royce.com
  5. 5. Rolls-Royce Holdings plc (2026). Rolls-Royce Holdings plc 2025 full year results. Results announcement, 26 February 2026. rolls-royce.com
  6. 6. 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. Updated 28 September 2026.

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