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Investing.com -- Moody’s Ratings has upgraded Rolls-Royce plc’s long-term issuer and backed senior unsecured ratings to Baa1 from Baa2, while maintaining a positive outlook.
The upgrade reflects Rolls-Royce’s "continued very strong performance, broad-based growth prospects, and a conservative financial policy that prioritizes balance sheet strength," according to Frederic Duranson, Moody’s Vice President and lead analyst for Rolls-Royce.
The company’s transformation program has delivered substantial earnings improvements, with operating profit in the Civil Aerospace division more than doubling since 2023. Moody’s expects this division to reach approximately £2 billion in profit for 2025, representing around two-thirds of group profit.
Growth sources are diversified across the company’s divisions. The Defence and Power Systems units are benefiting from new boat and aircraft orders requiring Rolls-Royce propulsion systems and engines, along with strong demand for data center backup power generation.
Moody’s anticipates Rolls-Royce will achieve its medium-term profit targets (set for 2028) by the end of 2026, despite these upgraded targets only being announced in early 2025.
The company has maintained a net cash position since 2024 and repaid additional debt using existing cash in October 2025. Moody’s expects Rolls-Royce to maintain its adjusted gross debt/EBITDA ratio around 1x through 2027.
As of June 30, 2025, Rolls-Royce’s total liquidity stood at £8.3 billion, including £5.8 billion in unrestricted cash and a £2.5 billion undrawn revolving credit facility maturing in November 2028.
The positive outlook suggests potential for further upgrades if Rolls-Royce continues to grow its installed base profitably while maintaining low leverage, strong cash flow metrics, and substantial liquidity.
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