Rolls-Royce Power Systems division put in another excellent performance in 2018, with adjusted revenue up 15 % to a record GBP 3.5 billion or EUR 3.9 billion (2017: GBP 3.0 billion / EUR 3.4 billion), and adjusted profit climbing to GBP 317 million (EUR 358 million), equivalent to an adjusted return on sales of 9,1 %.
Power Systems is the number two revenue earner of the three divisions that make up Britain’s Rolls Royce plc. The Power Systems order book of GBP 3.1 billion (EUR3.6 billion) at the end of 2018 was 28 % above the previous year.
Each of the division’s business segments reported good sales figures. Marine sales were 12% ahead, with sales of Industrial drive systems up to a full 40%. Powergen revenue grew by 5%, making it the only segment with a lower rate of growth than in 2017, a year that saw unusually high increases.
“Not only did we benefit from strong demand for our products due to the favorable state of the global economy, we are now also reaping the rewards of our hard work on the transformational change program which has made us significantly more profitable,” stated Andreas Schell, CEO of Rolls-Royce Power Systems AG and Head of the Power Systems Division, at the presentation of annual results for 2018.
Bergen Engines, a Norwegian subsidiary, has turned the page and is now a successful player in the field of stationary power generation. For the first time, it has produced more engines for the production of electricity than for marine propulsion.
As far as nuclear power is concerned, demand remains high. With its range of small modular reactors, Civil Nuclear has a solution that promises long-term export potential after its launch in the UK.
“With our RRPS 2018 transformational change program, we have fundamentally revamped the division’s cost structure, for example by eliminating a good quarter of product variants at a stroke,” said Marcus A. Wassenberg, Chief Financial Officer and Chief Human Resources Officer at Rolls-Royce Power Systems AG. “This has not only produced favorable results in 2018 but has also created a robust, forward-looking corporate structure for the longer term, which we will be using to implement the PS 2030 strategy,” Wassenberg continued.
Implementation of PS 2030
From engine manufacturer to integrated solution provider: the company is looking to build on its 2018 successes to drive forward the new PS 2030 strategy.
“2018 is proof-positive that we are on the right track with the move to hybrids and electric drive components, with gas engines and with digitalization, adding new technologies to our portfolio,” said Andreas Schell, “At the rail industry trade fair Innotrans, for example, we signed memoranda of understanding with several international customers for hundreds of Hybrid PowerPacks sold under the core MTU brand.”
Another solution for the implementation of integrated energy is provided by the use of microgrids. These stand-alone power grids intelligently combine a variety of conventional and renewable energy sources into a single grid, providing power to stand-alone plants. The company is currently building a validation center in Friedrichshafen for entire turnkey systems that the company intends to offer to large industrial customers and other large consumers.
The power generated by the combustion engines remains an important element. “The engine will always be one of our core competencies. But it is increasingly becoming part of a total solution,” said Schell. The new battery case, another integral part of a microgrid, is more than a new product from the MTU family – it is also a symbol of the company’s renewal.
Rolls Royce Power Systems also intends to step up its activities in the operation of sophisticated power delivery and power generation systems. “Service will continue to gain importance. Over a third of revenue currently comes from maintenance, spare parts and services – and that figure is rising,” said Schell. Rolls-Royce Power Systems is working on a new range of digital service products. Founded in Spring 2017, the company’s Digital Solutions unit has launched a number of digital products such as the MTU Go!Act smartphone app and the MTU Go!Manage web application, and has currently networked around 300 MTU PowerPacks in Hitachi express trains in the United Kingdom. Levering off what are now five Customer Care Centers around the world, Rolls-Royce Power Systems is continuously growing its digital service offering to customers.
The PS 2030 strategy also envisages expanding with partners in a way that would be difficult to achieve by working alone. “We are increasingly entering into partnerships – in different geographical areas and on different topics. Our intention is to grow with our partners,” said Schell. This includes joint ventures with partners in China and India to build engines and generators, and also with the aim of tapping into new markets. Other partnerships are helping Power Systems to become a solution provider, such as the acquisition by the company of a strategic stake in Berlin-based start-up Qinous, which focuses on energy storage and control solutions, the key technologies used in microgrids.
With the new strategy, a lasting change in the division is expected, including new career flows and job offerings. “We need to prepare our employees for the challenges of digitization and electrification. In the future, jobs at Rolls-Royce Power Systems will be more modern, more flexible and more digitalized. This year, around 100 developers of existing engines will be re-trained as electricity specialists. In addition, we will offer new professional training courses with a focus on information technology,” says Marcus A. Wassenberg, who is also Chief Human Resources Officer.