Profit boost for Rolls-Royce Power Systems

Rolls-Royce Power Systems reports that demand for products and solutions remains very strong, with continued record order intake in the first half of this year.
Ancillary Equipment / August 8, 2022
By Guy Woodford
Rolls-Royce Power Systems' H1 2022 revenue of €1.6 billion was up 20%

Demand has been strongest for power generation, with orders including mission-critical backup power for data centres for very large customers worldwide.

Global supply chain challenges have continued to impact the availability of key components. This is restricting the pace of revenue recovery and drove a substantial increase in inventory in the first half.

Order intake of €2.5 billion was 53% higher than the prior period. It included the highest quarter for order intake on record with the strongest growth in demand in power generation, governmental and industrial end markets. In some market segments, production capacities for 2023 are already fully utilised.

Underlying revenue of €1.6 billion was up 20% (H1 2021: €1.36 billion). Aftermarket services grew 17% with increased activity in both stationary and mobile solutions. OE revenue was up 21%, with particularly strong sales in power generation, marine and governmental end markets.

Underlying operating profit was €142 million (2021: €47m), up €95 million, giving an operating margin of 8.7%. The 17% increase in research and development costs reflects investment in new product development and transitioning products to sustainable fuel alternatives to help customers towards net-zero emissions.

"Power Systems expects good revenue growth in 2022 supported by record order intake, partly held back by the current global supply chain constraints," said Andreas Schell, chief executive of RR Power Systems.

"Operating margin is expected to be broadly flat with higher activity levels utilisation offset by continued inflationary pressures and increased research and development in net zero solutions. Cash conversion is expected to improve in the second half with some of the recent inventory build unwinding, but is still expected to be lower for the full year," he said.


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