Rolls-Royce Holdings reported a 13% rise in group revenue to GBP 9.1 billion, led by civil and power sectors. Operating profit increased by 50% to GBP 1.7 billion, with a margin of 19.1%, exceeding the 15-17% target. Despite potential outperformance, guidance remains cautious due to macro risks like tariffs and inflation.

The strong first-half results for 2025 from Rolls-Royce were marked by significant financial improvements and operational achievements. The margin expansion was driven by improvements in Civil Aerospace and Power Systems, with civil margins already surpassing midterm targets and driven by high-margin shop visits.

Rolls-Royce Power Systems division is experiencing robust demand for data center backup power, leading to sustained investment and potential growth. Revenue and margin forecasts have been raised to reflect the strong aftermarket demand, improved terms, and growth in power generation. The FVE for RR has been raised to GBP 11.20, with potential upside from easing tariffs and inflation.

Read more at Morningstar: Strong First-Half Results, Raising Fair Value