Rolls-Royce Holdings plc AGM Statement and Trading Update

We have had a strong start to the year across all three divisions. Rolls-Royce Holdings plc continues to deliver on its transformation and is proactively mitigating the impact associated with the conflict in the Middle East. As a result, our guidance for 2026 of £4.0bn–£4.2bn of underlying operating profit and £3.6bn–£3.8bn of free cash flow remains unchanged. Year-on-year growth in profit and cash flow across the Group continues to be largely driven by strategic initiatives. Rolls-Royce has a diversified and resilient portfolio of businesses. Widebody demand remains strong, and the young fleet is growing faster than the market. Business aviation, Defence, and Power Systems are all highly resilient businesses with attractive growth outlooks. Civil Aerospace had a strong start to the year driven by large engine and business aviation aftermarket growth, with business aviation flying hours ahead of budget. Large EFH (engine flying hours) grew by 5% to 115% of 2019 levels in the three months to 31 March. For the full year 2026, we continue to expect large EFH at 115%–120% of 2019 levels. There has been a significant recovery in EFH of Middle Eastern airlines, with EFH of Trent XWB engines fully recovered to pre-conflict levels. EFH growth in other regions remains strong, benefiting from capacity reallocation and improved operational performance, including fewer AOG (aircraft on ground). The majority of economically driven airline capacity reductions announced year-to-date have been narrowbody. We do not expect a change in the retirement profile of the Trent 700, which remains the most fuel-efficient engine on the Airbus A330ceo platform, with the majority of the fleet contracted up to the 2030s. Trent 700 EFH in the three months to 31 March were higher year-on-year. Growth in large engine OE deliveries in the first quarter was 18%, and our guidance for the full year remains unchanged. Growth in large engine shop visits in the first quarter was 12%. The number of AOG fell to a single-digit level at the end of April, a best-in-class level for the industry, and we continue to target zero AOG by the second half of the year. Demand for new widebody aircraft remains firm. Orders included 40 Trent XWB-97 engines for Atlas Worldwide (20 A350F freighter aircraft) and 30 Trent XWB-84 EP/32 Trent 7000 engines for Delta Air Lines. Orders for Trent 1000 XE engines on eight Boeing 787 aircraft in April demonstrate sustained investment in durability improvements, repositioning the Trent 1000 XE as a competitive, order-winning engine. The time on wing programme is progressing to plan, with the second phase of HPT blade improvements for Trent 1000/Trent 7000 certified at the end of last year. Over a third of the Trent 1000 TEN fleet has been upgraded to the new enhanced Trent 1000 XE standard. Defence had a strong start, driven by improved aftermarket performance and a 20% year-on-year increase in OE deliveries. Demand remains high for both mature and new programmes. Rolls-Royce demonstrated its unique positioning in next-generation autonomous aircraft propulsion with the first flight of the U.S. Navy’s MQ-25 autonomous refuelling aircraft in April, powered by the AE 3007 engine. In March, Rolls-Royce received an order for EJ200 engines to power Türkiye’s new Eurofighter Typhoon fleet. In April, the MT30 marine gas turbine was selected for up to 11 Australian Navy frigates, enhancing undersea warfare and air defence capabilities. Engine testing for the U.S. Army’s MV-75 Cheyenne II is progressing well, with endurance and altitude testing on track for later this year. In March, Rolls-Royce collaborated with Boeing on the critical design review for the U.S. Air Force’s B-52 re-engined with the F-130 engine. Power Systems also had a strong start, driven by power generation led by data centres and government demand. Order intake in the first quarter was around 50% higher than last year, with March being a record month for orders. Power Systems’ order backlog stood at £7.3bn at 31 March. In January, Rolls-Royce announced supplying 350 upgraded mtu Series 199 engines for German and international armoured vehicles. In March, an order for around 200 compact mtu PowerPacks for the Bundeswehr’s Puma armoured personnel carrier was signed, along with a memorandum of understanding with Polska Grupa Zbrojeniowa S.A. (PGZ) for mtu engine services. In March, Power Systems signed a contract with Voltaria Helios Energy Storage for a large-scale battery energy storage facility in Scotland. In April, Rolls-Royce SMR finalised contracts with GBE-N for three small modular reactors (SMR) at Anglesey, Wales, and with the ČEZ Group for up to six SMRs at Temelin, Czech Republic. Both contracts entered the execution phase, generating revenues and profits this year. Rolls-Royce SMR is the only company with multiple contractual commitments to deliver SMR units in Europe and is well positioned to become a market leader globally. The balance sheet remains strong, with credit ratings agencies upgrading Moody’s and Fitch ratings to A3 and A-, respectively, with a stable outlook. In February, a €750m bond was repaid from free cash flow. Progress is being made on the £2.5bn 2026 tranche of the £7bn–£9bn share buyback across 2026–2028, having completed more than £750m to date. The 2026 Half-Year results will be announced on 30 July 2026.