Energy systems push Rolls-Royce revenues 16% higher

Photo: Rolls-Royce Power Systems

Rolls-Royce’s Power Systems business unit, which incorporates the MTU brand, has reported double-digit increases in revenue, profit and cash flow for full year 2023.

Revenue was up 16% to EUR 4.56 bn* (£ 3.97 bn*) with underlying operating profit improving 44% to EUR 474 million (£ 413 million). The improved earnings were primarily driven by energy systems, the company noted, particularly MTU standby power systems for data centers. Pricing and cost management measures resulted in a higher margin (10.4% vs. 8.4% in 2022) for the full year, and helped propel higher profits in the second half.

Order intake for the business unit was EUR 4.99 bn (£ 4.34 bn), on a par with the previous year, with a book-to-bill ratio of 1.1 and order coverage for new products of around 80% in 2024. Demand was especially strong in power generation, marine and governmental business, the company indicated. Cash flow from operating activities was EUR 530 million (£ 461 million) with a cash conversion rate of 112% compared to EUR 185 million (£ 158 million) and 56% in 2022.

Dr Jörg Stratmann, CEO of Rolls-Royce Power Systems, attributed the company’s positive performance in 2023 to a consistent focus on markets where the company can be particularly successful, which he said will remain its strategy in the years ahead. He cited five strategic initiatives: power generation, governmental business, marine, battery storage and service.

In addition, the company made its first investment in 20 years in the development of a new MTU engine platform. “It will enable us to offer customers a wider performance range and will give us a foundation for further developments in combustion engines using alternative fuels,” said Stratmann.

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Other significant developments in 2023 included the commissioning of one of the largest battery and energy storage systems in Europe, which will help integrate renewable energies into the Dutch public grid, as well as implementation of the “From Bridge to Propeller” strategy for large yachts with the acquisition of yacht automation and bridge manufacturer Team Italia Marine.

“We’re seeing growth potential in nearly all our markets, largely independent of global economic developments,” Stratmann commented. “Our transformation with its strong focus on high-margin business and profit is paying off.

“After taking the first steps in implementing the new strategy last year, we are now working rigorously on continued implementation,” he added, “and are convinced it’s going to enable us to set technological and economic standards in the industry.”

* Figures in EUR for information purposes only using annual average exchange rates. The Sterling figures are authoritative.