Rolls-Royce Power Systems reports increased profits and restructuring

Malcolm Latarche
Malcolm Latarche
ShipInsight

07 August 2019


Rolls-Royce Power System reported increased profits in its first half 2019 reports and has announced a restructuring of the division which will see MTU lose its corporate identity but remain as a brand name for products and services.

The Power Systems division was not included in the disposal of the company’s marine division to Kongsberg last year and is the only division of Rolls-Royce that still has marine connections through its production, supply and servicing of MTU (fully owned by RR since 2014) and Bergen engines.

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Rolls-Royce Power Systems business unit saw a significant increase in revenue and profit in the first half of 2019 compared with the same period of last year, despite the uncertain global economic situation. Adjusted revenue was up 6% to £1.553Bn (€1.778Bn), while adjusted operating profit grew by 20% to £96M. Economically and strategically important projects and orders were the key factors determining the first half of 2019, which was also characterised by the further implementation of the PS 2030 future strategy.

Although the marine sector was not singled out specifically by CEO Andreas Schell who announced the results, several developments that cut across different sectors including marine and served by the unit were.

Revenue from services (up 7%) grew more than the traditional engine related business. This was due primarily to the 25% increase in the number of long-term maintenance contracts concluded and the increase in sales of replacement parts. “This shows that our customers no longer simply buy an engine or a drive system but tend increasingly to purchase a total package that includes maintenance, which offers them reliability and fail-safe stability with calculable costs,” said Schell. To improve its services, Power Systems has gone digital. There are now over 3,000 data loggers installed on MTU engines to collect data for digital analysis in order to prevent damage for example by providing early maintenance.

For the MTU battery container that was launched in spring, the company is already working on several dozen offers for potential customers. In collaboration with its partner Qinous, Rolls-Royce will also be offering battery containers under the MTU brand in future with capacities ranging from 30 to 2500 kVA and will thus open up new markets.

In addition to electrification and digitalisation, Power Systems is also working on the use of alternative fuels, such as gases and liquid fuels obtained from renewable energy sources that can be used to achieve carbon-neutral operations.

“We are not going to take our leave of the diesel but are convinced that it will in future continue to be an integral part of our product portfolio – in the medium term, however, to a lesser degree as is the case today. Because there is often no alternative, it is constantly being developed further and we have just recently presented the fifth generation of our MTU Series 4000 engine,” said Schell. Hybrid drive systems, gas engines, alternative fuels and possibly even fuel cells will in some cases replace it. “Whatever happens, however, we intend to offer our customers the most appropriate solution – often with, but more frequently without diesel. For this reason, we are changing and will be offering our customers new solutions and products we don’t yet have today. That will secure our future,” added Schell.

Beginning in autumn of this year, the Power Systems business unit will emphasise its affiliation with the British Rolls-Royce Group in its brand profile more clearly than it has done to date. A new brand architecture is currently evolving, which will be visibly implemented as of autumn with the launch of the new MTU website.

One of the first visible steps to be taken will be the renaming of four operating companies, which manufacture products and solutions: MTU Friedrichshafen GmbH will become Rolls-Royce Solutions GmbH in autumn 2019. This will be followed by MTU America Inc., which in future will operate as Rolls-Royce Solutions America Inc. Today’s MTU Onsite Energy GmbH in Augsburg will become Rolls-Royce Solutions Augsburg GmbH and MTU Onsite Energy Systems GmbH in Ruhstorf will be renamed Rolls-Royce Solutions Ruhstorf GmbH. The remaining subsidiaries will successively be given new designations based on the above examples. The products of Bergen Engines will also be part of the new brand architecture.

“The new brand architecture will provide clarity and improve the recognition of our company and its products,” said Schell, “Our new profile is a clear commitment to Rolls-Royce, as its second largest business unit. By the same token, Rolls-Royce is committed to our MTU brand, which is something we are proud of,” Schell added.

The new, clear brand structure will support the PS 2030 strategy of the Power Systems business unit and the global growth path. Rolls-Royce will be the corporate brand and the employer brand. Consequently, the companies within the business unit that include MTU in their names will be given a new designation. MTU, as the brand name customers are familiar with, will continue to be used to identify the company’s products and solutions. The current MTU Onsite Energy brand for decentralised power supply systems will be integrated into MTU.