Rolls-Royce shares surge as engine maker lifts outlook

London: Shares in Rolls-Royce surged by more than nine percent in London trading Thursday after the British maker of aircraft engines raised its full-year outlook on strong demand.

The company reported a fourfold increase in first-half net profit to £4.4 billion ($5.8 billion), which compared with £1.1 billion in the first six months of 2024.

The sharp rise was attributed to rising sales and a significant accounting gain linked to weakening of the dollar.

Revenue increased seven percent to £9.5 billion in the reporting period.

Rolls-Royce, which supplies engines to the world's biggest aircraft manufacturers Airbus and Boeing, has undergone a major turnaround since chief executive Tufan Erginbilgic took the helm in 2023.

"Our actions led to strong first half year results, despite the challenges of the supply chain and tariffs," Erginbilgic said in the earnings statement.

Rolls-Royce benefits from a trade agreement between the UK and US struck in May, which removes tariffs on Britain's aerospace sector.

The agreement places a 10-percent tariff on the import of British goods to the US, and lowers sector-specific levies including on automakers.

Rolls on Thursday said it expects to "fully offset the impact of the announced tariffs through... mitigating actions" by the group.

It expects to deliver underlying operating profit of up to £3.2 billion for the year, compared with its previous forecast of between £2.7 billion and £2.9 billion.

The group announced a dividend for the first half of the year, after reinstating shareholder payments last year.

"Rolls-Royce continues to soar above expectations, delivering yet another set of high-flying results and profit guidance upgrades," said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.

"Revenues are being boosted by the upward trend in engine-flying hours, which are now cruising well above pre-pandemic levels," he added.

Around 0900 GMT, shares in Rolls-Royce were up 9.2 percent at £10.79 on London's rising FTSE 100 index.

The UK government recently made Rolls its preferred bidder to build small modular nuclear reactors.

Rolls-Royce SMR, which aims to cut the costs and complexity of building nuclear power stations, is hoping to be profitable by 2030.