London, June 23, 2026, 10:05 (BST)
Rolls-Royce Holdings dropped around 2% early Tuesday in London, sliding more than the wider market even as its Power Systems unit reported new orders. The last quote at 09:47 BST showed shares at 1,383 pence, down 2.05%. The FTSE All-Share was off by 0.89%.
Rolls-Royce said it signed a framework deal with Italy’s Overmarine to run from 2026 to 2029. The agreement is for 30 propulsion systems, 64 mtu Series 2000 engines, and NautIQ bridge equipment. Rolls-Royce did not disclose the contract value.
Gianluca Bononi, managing director at Rolls-Royce Power Systems in Italy, described the agreement as “the next step together.” Maurizio Balducci, CEO of Overmarine, said the integrated control and propulsion package “simplifies construction and enhances comfort” for yacht owners.
European stocks tumbled in a risk-off trade. The STOXX 600 dropped 1.3%, hitting its lowest since June 12 as markets worried about more U.S. rate hikes and eyed big AI spending from companies. Kiran Ganesh, who heads global investment communications at UBS, said some investors may look at “potential earnings sustainability” if debt-fueled investments don’t pay off. Reuters
Rolls-Royce shares started trading close to their recent record. After Tuesday’s drop, the stock stayed within 3% of its 52-week peak at 1,424.2 pence, putting the company’s value near £114.6 billion. Traders are watching if fresh contracts can move profit or cash outlooks.
Rolls-Royce expects underlying operating profit of £4.0 billion to £4.2 billion in 2026, up from £3.46 billion last year. Free cash flow is forecast at £3.6 billion to £3.8 billion. The company’s underlying profit figure excludes some accounting items, while free cash flow is the money left after operating and investment spending.
Capital returns are also in play. Rolls-Royce is targeting £7 billion to £9 billion in share buybacks from 2026 to 2028, with £2.5 billion planned for this year. By April 30, the company had already bought back more than £750 million from the 2026 tranche. Buybacks take cash from the balance sheet to purchase stock, which can cut the share count.
Overmarine’s statement came after a Monday order for Rolls-Royce Power Systems. Rolls-Royce will deliver mtu engines for Korea Coast Guard’s new 50-ton and 500-ton patrol boats. The first batch, eight engines in four shipsets, is scheduled by 2027. Over 15 years, more than 50 shipsets could be ordered for the 50-ton program. “These mtu engines will let crews respond swiftly and effectively to maritime challenges,” said Michael Long, who heads Asia-Pacific government sales at Rolls-Royce Power Systems. mtu Solutions
Berenberg bumped its rating on the stock to “buy” this month, lifting the price target to 1,430 pence. The bank noted that engines less than 10 years old now make up 51% of Rolls-Royce’s large-engine fleet, ahead of the 43% for Safran and 35% for MTU Aero Engines. Rolls-Royce has a 93% stake in the widebody aircraft market, the big twin-aisle jets mostly flying long-haul routes. London South East
Execution risk is still an issue. Airline bosses have been vocal about problems with engine makers Rolls-Royce, GE Aerospace and RTX’s Pratt & Whitney, particularly when it comes to engine supply and long maintenance delays. United Airlines CEO Scott Kirby said the “lack of engines” might keep limiting the industry for at least five years. He put specific blame on Rolls-Royce. If repairs stay slow or engines don’t last as long, airlines could see less flying time and lower service revenue and cash flow. Reuters
Rolls-Royce is set to address investors at an energy-transition conference on June 25, followed by a Power Systems presentation run by JPMorgan on June 26. But the main focus arrives July 30 with half-year results, where the company will give a trading update and revisit its full-year outlook.
