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Rolls-Royce shrugs off supply chain and tariffs woes as profits soar
By Tom Batchelor
Jul 31, 2025, © Leeham News: 
Rolls-Royce shrugged off lingering supply chain challenges and the uncertain tariff environment to post a strong first half performance in 2025.
CEO Tufan Erginbilgic hailed continued progress in his multi-year transformation of the British aerospace company, which saw underlying operating profit increase by 50% to £1.7bn ($2.25bn) with a margin of 19.1%.
This compares to an underlying operating profit of £1.1bn in the first half of 2024, and a margin of 14%.
The largest increase in underlying operating profit was in Civil Aerospace, driven by strong large engine aftermarket performance, contractual margin improvements and higher spare engine profit.
Underlying revenue reached £9.1bn in H1 2025, up 13%, with strong growth in the civil aerospace and power systems divisions.
Free cash flow in the period was £1.6bn, an improvement of £0.4bn compared with the prior period – up 37% yoy.
Rolls’ turnaround
“Our performance continues to be impacted by industry wide supply chain constraints which understate the true impact of our transformation,” Erginbilgic told analysts on Thursday’s earnings call.
“The actions that we have taken have driven an improvement in the supply chain, particularly in the availability of finished parts, with a 15% increase in parts delivered to us in the period.
“This has supported a higher number of shop visits and reduced turnaround times, particularly for the Trent XWB 84 and Trent 700 – both have fallen significantly.
“Despite an improvement in the availability of parts, we have continued to see product cost inflation as a result of supply chain challenges.
“We have been quick to react to the tariffs, where we have fully mitigated the direct impact across the group as we transform Rolls-Royce into a more proactive, agile business.”
Civil Aerospace profit up 63%
The Civil Aerospace unit achieved an operating profit of £1.19 billion, up 63%, with a 24.9% operating margin, up 7.1pts. Division revenues were up 17% to £4.8 billion.
The aftermarket is buoyant. In May, Rolls-Royce and Turkish Technic announced plans to establish a new maintenance, repair, and overhaul (MRO) facility at Istanbul Airport which will help address growing long-term aftermarket demand.
Rolls said the facility will be operational by the end of 2027, providing maintenance services for Trent XWB-84, Trent XWB-97, and Trent 7000 engines.
“In civil aerospace, we delivered strong aftermarket profit with higher volumes and margins across LTSA [Long-Term Service Agreements] and time and materials,” Erginbilgic told investors.
“In large engines, our aftermarket revenue grew by 28% in the first half, with even higher growth in aftermarket operating profit, as a result of improved margins in both LTSA and time and materials.
“Contractual margin improvements were higher than last year, driven by onerous contract renegotiations and the achievement of key time on wing milestones on the XWB 84.”
Rolls-Royce expectations for 2025 and beyond. Credit: Rolls-Royce
Rolls has been steadily capturing a larger slice of the civil engine market.
Erginbilgic said Rolls was also exploring options to re-enter the narrow-body airplane market, a move the engine-maker has been talking about for months.
“In widebodies, our installed fleet has grown at 10% per year since 2022, versus 5% for the market, as we have captured more than 50% of the deliveries,” he added.
“We continue to expect installed fleet growth of 7-9% per year to the mid term, driven by rising aircraft deliveries as we continue to capture market share.
“This is underpinned by our large order backlog of more than 2,000 engines.”
Contract renegotiation
Erginbilgic said Rolls had reaped a multi-billion pound cash benefit from renegotiating OE and aftermarket contracts in civil aerospace.
“We made great progress in the first half of 2025. The contracts that we renegotiated in the first half alone will benefit cash flows by £1.4 billion over their contract life.”
On defense, Rolls’ order intake reached £4.0bn, with a book-to-bill ratio of 1.8x.
Over the period, Rolls was awarded a £0.5bn five-year support contract with the UK Ministry of Defence for maintenance and service of the EJ200 engine that powers the UK Royal Air Force’s Typhoon aircraft.
The company also secured orders for Trent 7000 engines for the new upgraded Airbus MRTT+ (multi role tanker transport plus) aircraft, and signed a sustainment contract worth £1bn with the US Air Force for the AE 2100 engines.
Rolls’ defense order backlog now stands at £18.8bn, up 120% yoy, However the operating profit was flat at £342m versus £345m a year earlier, with an operating margin of 15.4%, down 0.2pts.
Upgraded guidance for 2025
Despite a “challenging and uncertain external environment,” Rolls has upgraded its guidance for 2025.
The manufacturer now expects to deliver underlying operating profit of £3.1bn-£3.2bn and free cash flow of £3.0bn-£3.1bn in 2025.
However, compared to an operating profit of £1.7bn in the first half, Rolls expects a slightly lower delivery in the second half of 2025 due to a lower contribution from net contractual margin improvements (which in H1 2025 amounted to £288m), an increased number of OE deliveries and higher MRO investment related costs in civil aerospace.
“Rolls-Royce benefits from the same strong underlying trends in aftermarket than peers,” said Bernstein analysts after Thursday’s results publication. “But also from the continued renegotiation of contracts, durability improvements and cost-cutting.
“The medium-term (2028) targets look increasingly achievable. It sounds clear from management’s tone, and given the performance, that the 2028 targets should be upgraded next.”
First time I read that Rolls Royce is out delivering and out selling General Electric on Widebodies.
This was not the case 20 years ago..
Sure was a quick turnaround for RR.
Interesting.
Indeed.
A certain other aerospace company has been trying to turn around for 6 years now, and it still can’t make a profit.
Food for thought.
Their business model which made them so vulnerable to the Covid shutdown also put them in prime position to rapidly benefit from the post-Covid boom.
Whether or not that business model is “wise” or not is another matter, but after the pain of the Covid era the rush of cash afterwards must surely be very soothing.
XWB-84 meeting time on wing milestones. GE better take note.
Suggests that the A350-900 is dependable workhorse for the airlines. Should be a money earner for the company for a long time to come.
In Feb this year RR talked about how similar improvements were already included in new Trent 1000s, and were to be retrofitted to the in-service fleet over the next two years. It’s going to be interesting to see how the Trent 1000 / TEN pans out for 787 / Trent operators, see if the changes add up to a whole-life advantage.
Good to see them bounce back.
It looked worse than Boeing in the sense of failing for a while.
Ironic there is no longer competitions up in Widebody. In theory the 787 but GE is getting vast majority it not all future installs. Probably some previous carriers that the cost to switch is high enough to stick with the Trent 10.
They should have that drag gone in another year. Exclusive on A330/A350 is major benefit.
XWB-97 is a drag though, not all went smoothly there.
They do have substantial business in US from the Allison acquisition which was a nice product portfolio add.
GE has had its own issues with the Gen9X though its had the chance to correct them with the 777X timeline issues
Its worth noting that RR is looking to get 80% improvment by 2027 on the 1000 and 7000 (assume they mean the TEN which is mostly common with the 7000)
That is a huge shortfall and have to assume its the older 700 and GenX, GE90 being compared to.
There is a lot of confusion in RR per the Trent 1000, the Trent 1000-10.
The TEN is 75% different than the straight up 1000.
While they have a fix on the Plain 1000 Harmonics, I doubt they are doing any improvements.
Too many difference to back fit that.
So the existing 1000 fleet is stuck with the less capable or they buy a GE or Ten and replace it.
Hopefully RR comes up with a swap plan and remove that pain, retire the Plane (pun) 1000s into the ash can of history.
The Trent Ten is just a modified ( 75% different OR modified) T1000.
The T1000 first test run was 2006 , so nearly 20 years ago now.
because Rolls had the exclusive on A350 and its new engine the Trent XWB , a lot of the improved technology went to update its 20 yr old engine.
this happens with all engines with long lifespans including GEnX
“GE Aerospace engineers redesigned the stage 1 high-pressure turbine (HPT) blade to extend its lifespan’
The list of nX variants and thrust upgrades suggests a lot of the latest highest thrust model is very different
GEnx-1B54/P2: Offers a take-off rating of 255.3 kN (57,400 lbf).
GEnx-1B58/P2: Offers a take-off rating of 271.3 kN (61,000 lbf).
GEnx-1B64/P2: Offers a take-off rating of 298.0 kN (67,000 lbf).
GEnx-1B67/P2: Offers a take-off rating of 308.7 kN (69,400 lbf) and EASA certification.
GEnx-1B70/P2: Offers a take-off rating of 321.6 kN (72,300 lbf).
GEnx-1B70/72/P2: Offers a take-off rating of 321.6 kN (72,300 lbf).
GEnx-1B70/75/P2: Offers a take-off rating of 341.2 kN (76,700 lbf).
GEnx-1B74/75/P2: Offers a take-off rating of 341.2 kN (76,700 lbf).
GEnx-1B75/P2: Offers a take-off rating of 345.2 kN (77,600 lbf).
GEnx-1B76/P2: Offers a take-off rating of 349.2 kN (78,500 lbf).
GEnx-1B76A/P2: Offers a take-off rating of 349.2 kN (78,500 lbf).
GEnx-1B78/P2: Offers a take-off rating of 357.6 kN (80,400 lbf).
ie B54 is 57k lbs thrust while B78 is 80k
The introduction of Titanium Aluminide ( instead of nickel alloy ) blades in the low-pressure turbine (LPT) contributed to a lighter and more efficient engine, reducing weight by approximately 200-300 pounds.
MTU- who work on GeNx- has also added this new tech to its section of the P&W GTF for A320 neo
Just look at the GeNx pressure ratios, are these going to be mostly unchanged engines ?
Overall pressure ratio (takeoff / top-of-climb)
43.8 / 53.3 …… 787-8
46.3 / 55.4 …….787-9
47.4 / 58.1 …….787-10
@Duke:
By any metric, 75% is a new piece of machinery. If you can’t insert the parts into the old engine, then its a new one not an upgrade.
The TEN was the pacing program for the 7000, it was quicker to keep on going even though not any point. Leasors don’t want it, too many fleets don’t have it. BA does not want it. Having a new engine along with an old one, well, you might as well just buy the better engine.
A good argument can be made they got the 7000 for free as it was a a direct piggy back off the TEN. A lot like the 787, yea Boeing got a new aircraft at 3-4 x a normal project cost.
80% upgrades in the 7000 says a lot of how bad the base engine was.
No question GE went through a progression on the GenX, but they did get it up and then past spec. The TEN just got up to snuff.
GE can insert the GenX tech upgrades into the original engines, RR can not, in fact they no longer make the 1000, its been replaced by the TEN.
Of course you can get the parts for the 1000, but those parts get you no upgrade. You need to swap to the TEN to get that.
MTU is an impressive operation. They and P&W are really a CFM type operation (you have to throw the Japanese partners into the mix).
GFM also did a major upgrade to the LEAP engines and they are the ones not delivering engines at Airbus rate.
You said 75% is new . The actual claim is ‘new OR modified’, and thats for a higher thrust versions too.
‘New’ modules are put into jet engines all the time, GE even did it for its early GEnx with “durability” issues ( LOL)
“This upgrade, focused on the high-pressure turbine (HPT), aimed to increase time on wing by approximately 30%. The upgrade involved modifications to the HPT nozzles and blades, as well as the combustor lining and fuel nozzles. ”
It wasnt an a pure ‘upgrade’ but a fix under FAA instructions!. Thats incorrect to say its ‘ to get past the previous spec’
https://www.ainonline.com/aviation-news/air-transport/2016-04-25/faa-orders-fixes-genx-equipped-boeing-787-dreamliners
Thats later than the earlier turbine blade shattering or the shaft fail
https://aerossurance.com/safety-management/b787-genx-fan-shaft-failure/
The current production is Trent 1000-E produces 62,264 lbf of takeoff thrust, while the Trent 1000-R can generate 81,028 lbf. Thats a 20k difference. No thrust ‘bump’ there .
The R variant is marketed as the ‘Ten’
Im surprised you have such a limited understanding of GEnX major engine issues. But apparently it gets only favourable media coverage in US
‘GE can insert the GenX tech upgrades into the original engines, RR can not, in fact they no longer make the 1000, its been replaced by the TEN.”
No it hasnt. The T1000 is made in two thrust variants, E and R. marketed as the TEN.
The Trent 7000-72 is on the same EASA type certificate . Does that mean its a TEN ?
Earlier variants can have major modules supplied new – with upgrades.
I provided a long list of GE variants , not all are in production as complete new engines. Major modules would be available for earlier engines too. The fixes not upgrades are numerous. Turbine blade shedding, the fan shaft spline, the fan ice problem etc
The Trent TEN is a separate engine and the 1000 has been discontinue.
Yes they are fixing the issues in the 1000 and supply all the needed spare parts. They have no choice, cheaper than giving an airline a new set of TENs per aircraft and the install. Its possible as the 787 is designed to swap engines but its a cost.
And yes the 7000 is a bleed air version of the TEN. All well documented and why they could not get ahead as they had to do the TEN first. Its why there was a significant delay in the A330NEO.
The certification documents say they are they are all same engine series -1000, in fact according to the certs there is no such engine as ‘Ten”
The facts dont agree with your claims
https://www.easa.europa.eu/en/document-library/type-certificates/engine-cs-e/easae036-rolls-royce-deutschland-trent-1000-series
GEs CF34-10 however has a separate type cert to the much older CF34 variants as they ARE different engines
Really good to see Rolls turn things around. Kudos and congratulations to them.
Ironically the pandemic may have saved them, as the fleet was mostly grounded during the worst of the repair & overhaul period. Which is the opposite of Pratt & Whitney, whose GTF woes hit just as airlines were returning to flight.
Kind of interesting when they reported that the 787 was heavily flown during the COVID mess.
It was the most economical wide body and best option so if you flew it was a 787.
Pity Delta which didn’t have the wisdom to order the 787.
Oh and tell me how much have UAL and AAL suffered from repeated delays of taking delivery of the “most economical WB”? 🙄
Seems LEAP engines aren’t holding up in the desert.