Rolls-Royce just raised its guidance for the full year

Rolls-Royce Holdings PLC (LON: RR) is up 20% this morning after raising its guidance for full-year underlying operating profit.

Rolls-Royce sees nearly £1.0 billion in FCF

The aerospace and defence company now forecasts its underlying operating profit to fall between £1.2 billion and £1.4 billion ($1.55 billion and $1.81 billion). Previously, it had guided for £1.0 billion at the top end of the range.

Rolls-Royce Holdings PLC also improved its outlook on free cash flow to £950 million today. In the press release, CEO Tufan Erginbilgic said:

Our multi-year transformation programme has started well. There’s much more to do to deliver better performance and to transform Rolls-Royce into a high performing, growing business.

Rolls-Royce stock is now up a whopping 85% versus the start of 2023.

Rolls-Royce blew past estimates in H1

On Wednesday, Rolls-Royce Holdings PLC also published a strong trading update for H1. The London-listed firm sees up to £680 million of underlying operating profit in the first six months of the year – well above the consensus estimates. According to the Chief Executive:

Better profit and cash generation reflects greater productivity, efficiency, and improved commercial outcome.

Free cash flow in the six-month period is expected in the range of £340 million to £360 million, as per the press release, leaving City forecasts of about £50 million miles behind. Most importantly, Rolls-Royce said it was seeing signs of strength across all of its businesses.

Wall Street currently has a consensus “overweight” rating on Rolls-Royce stock.