2022 to match 2019, says Rolls-Royce Power Systems
By Mike Brezonick06 August 2021
In reporting its first half financial results recently, Rolls-Royce Power Systems Chief Financial Officer Louise Öfverström said he expects the Power Systems business unit to match 2019’s pre-COVID figures in 2022. For the first half of the current year, he said,“our financial results are in line with our expectations.”
The company’s revenue of €1.36 billion (US$1.59 billion) was broadly in line with last year’s comparative period (€1.366 billion), while adjusted profit increased by €11 million (US$12.9 million) to €47 (US$55.2 million). Adjusted return on sales was 3.5% compared to 2.7% in 2020, reflecting the economic recovery currently underway, and the 19% improvement in order intake in the first half bodes well for continued progress, the company said.
Recovery in all markets
“We responded to the pandemic with quick and decisive actions, protecting our employees from infection as best we can and continuing to run our business successfully despite adverse conditions,” said Andreas Schell, CEO of Rolls-Royce Power Systems. “We have also made unswerving progress in transforming the company into a solution provider with a view to emerging even stronger from the crisis.”
In all end-user markets, Power Systems said it is benefitting from the recovery of the global economy. “The 13 market segments in which we operate are reacting at different speeds and with differing levels of response, and this is once again proving to be a stabilizing factor in our business model,” Öfverström said.
Service revenue growing
The economic upswing as the COVID-19 pandemic wanes is already driving service revenue which improved 13% as customers regained the ability to use their mtu products, consequently placing more service orders.
Growing customer’s demand
In new sales of mtu products and solutions, Rolls-Royce Power Systems said it is seeing an increasing investment appetite in its customer base. The Chinese market, which regained strength early on, again made a significant contribution to sales and earnings. The luxury yacht market is booming, capital investment is increasing among public sector customers, and industrial customers are placing more orders.
The commercial shipping market appears to be taking more time to recover, with pandemic-related travel restrictions still inhibiting the transport sector. The strongest-performing segment in terms of sales – representing 32% of Power Systems revenue – is once again the solutions business for distributed power supplies, above all standby power systems for vulnerable facilities such as data centers and hospitals.
“We can see from the order intake that business is returning to a more normal level,” said Öfverström. “This will have a favorable impact on results in the second half of the year, which at Power Systems is generally stronger than the first half.”
The highest order intake was recorded by the Power Generation segment and the Marine & Government business, highlighted by growth in mtu propulsion systems for yachts.