Shares in Rolls-Royce have soared 21% to 186p after the company increased its full-year guidance on the back of a strong first half to 2023.

In an unscheduled trading statement, the company announced that operating profit at the FTSE 100 aerospace and defence group came in at between £660m and £680m in H1 2023.

These figures have been attributed to the group’s successful early transformation benefits, which include commercial optimisation, cost efficiencies and focused investment.

The aerospace and defence departments led the way, both recording increasing profits of around £400m and £260m respectively, up from a loss of £79m in the former and 38% in the latter.

Rolls-Royce also recorded free cash flow of £340m-360m, which was forecast by the City to be around £50m.

Furthermore, the company recorded £1m in profit in its power systems division, which now stands at £120m. The division is expected to see a stronger performance in the second half of the year as a result of seasonally higher volumes.

Overall, Rolls-Royce now anticipates full-year underlying operating profits upwards of £1.4bn, increasing by approximately £400m, alongside free cash flow of around £1bn, an increase of £200m.

Chief executive officer of Rolls-Royce, Tufan Erginbilgic, said: “Our multi-year transformation programme has started well with progress already evident in our strong initial results and increased full year guidance for 2023. There is much more to do to deliver better performance and to transform Rolls-Royce into a high performing, competitive, resilient, and growing business. Despite a challenging external environment, notably supply chain constraints, we are starting to see the early impact of our transformation in all our divisions. Better profit and cash generation reflects greater productivity, efficiency and improved commercial outcomes.”

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