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A GOOD RESULT FOR ROLLS-ROYCE POWER SYSTEMS

Monday, March 2, 2020 

Rolls-Royce business unit Power Systems says it overcame difficult market conditions in 2019 and succeeded in growing against the trend to deliver a strong full-year result.

Underlying revenue increased by 4%, coming in above the €4-billion mark for the first time. Underlying operating profit grew by 15%, corresponding to an adjusted return on sales of 10.1% (up from 9.2% in 2018). Now generating 23% of overall revenue at UK technology group Rolls-Royce, Power Systems remains its second largest business unit.

“What stands out is that we have once again managed to strengthen the position of our MTU-brand products and solutions on a deteriorating market. That gives us a solid basis for further enhancing our profile as a provider of climate- and eco-friendly integrated drive and energy solutions. With them, we’re not only accelerating the energy turnaround, but consistently implementing our PS 2030 vision,” said Andreas Schell, CEO of Rolls-Royce Power Systems.

Most of the increase in 2019 came from the power generation business, though marine sales posted a slight increase. Revenue from service activities and products increased by 4% across all segments, contributing some 33% of total revenue.

“All our financial figures point to a healthy business unit that has achieved profitable growth for three years in a row. We can safely say that 2019 was a very good year for the business,” said CFO Louise Öfverström.

In 2020, growth of the Power Systems business unit is expected to be on the moderate side. The faltering economic conditions that defined the second half of 2019 will continue to be felt in the first half of this year and may still deteriorate. Several measures are being enacted by the company to counteract the effects of weaker demand.

For the longer-term future, the ‘FIT2X’ programme will prepare Power Systems to evolve as a provider of integrated solutions.  “We find ourselves having to strike a balance between dealing with a deteriorating marketplace and achieving our breakthrough into new technologies,” said Öfverström.

The Bergen Engines subsidiary is undergoing a strategic review. “We’ve arrived at the conclusion that Bergen Engines, with its highly attractive product portfolio, would develop more advantageously in a different setting to the Rolls-Royce Power Systems business unit,” said Schell, adding that from FY 2020, Power Systems results will no longer include figures for Bergen Engines.   

In the marine marketplace, the company says that the first passenger ferry powered by MTU gas engines is to go into service on the Wadden Sea in Holland in May,  while the first inland waterway ferry to be powered by an MTU gas engine is currently being assembled on Lake Constance for the City of Constance.

Hydrogen technology occupies a central position in possible future scenarios for the business. “We firmly believe that hydrogen is one of the keys to the energy turnaround,” said Schell. It is vital, however, that the hydrogen is manufactured in a climate-friendly manner using renewable energy sources. Thus the company is engaged with partners on several projects for the climate-neutral manufacture of hydrogen as a basis for producing energy or synthetic gaseous or liquid fuels, also known as Power-to-X. “With these fuels, we can make diesel engine operation virtually climate-neutral and save resources at the same time,” said Schell.

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