Increase in profits 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.

Demand was strongest for power generation with orders including critical backup power for very large customer data centers around the world.

Global supply chain challenges continued to impact the availability of key components. This limits the pace of the revenue recovery and led to a substantial increase in inventories in the first half.

Order intake of €2.5 billion increased 53% from the prior period and included the highest quarter for order intake ever, with the strongest growth in demand in end markets power generation, governmental and industrial. In some market segments, production capacities for 2023 are already fully utilized.

Underlying revenue of €1.6 billion increased by 20% (H1 2021: €1.36 billion). After-sales services increased by 17% with increased activity in fixed and mobile solutions. OE revenue increased 21% with particularly strong sales in the power generation, marine and government end markets.

Underlying operating profit amounted to €142 million (2021: €47 million), up €95 million, representing an operating margin of 8.7%. The 17% increase in research and development costs reflects investment in new product development and the transition of products to sustainable alternative fuels to help customers achieve net zero emissions.

“Power Systems expects good revenue growth in 2022, supported by record order intake, partly held back by current global supply chain constraints,” said Andreas Schell, Managing Director of RR Power Systems. .

“Operating margin is expected to be broadly stable with higher activity levels utilization offset by continued inflationary pressures and increased research and development into net zero solutions. Cash conversion should improve in the second half as some of the recent stock building unwinds, but should still be lower for the full year,” he said.

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