Rolls-Royce Power Systems Asserts Itself against Challenging Markets

• Future program bearing fruits

• Assertion against shrinking markets – revenue and EBIT remain nearly constant

• RRPS 2018 on track – gained transparency, ground work established

Rolls-Royce Power Systems has asserted itself against adverse market conditions in 2016. The adjusted revenue was £2.65bn (2015: -1%) at steady exchange rates. The operative margin slightly decreased to 7.2% (2015: 8.1%). The profit fell by £27m before exchange rate impacts (-14%) due to the slightly lower margin. With the results of 2016, the application Power Systems contributes 19% to the overall revenue of the Rolls-Royce Holding plc (2015: 18%) and is the second strongest revenue contributor in the group.

At the end of 2016, the order book showed £1.8bn (2015: £1.9bn). The order intake was with £2.4bn at the end of 2016 (2015: £2.5bn) only slightly lower than the previous year after currency adjustments. Downturns due to the oil, gas and commodity markets as well as due to less public orders were balanced out by higher orders for electricity generation, agricultural vehicles and industrial drives.

“We achieved a solid result for 2016 – and asserted ourselves in a difficult and declining market environment. The future program RRPS 2018 has already shown first successes in 2016 and had a positive influence on our result by affecting our revenue as well as significantly boosting our efficiency”, explained the chief executive Andreas Schell during the press conference on 21 February 2016 in Friedrichshafen.

RRPS 2018 makes an impact

The future program RRPS 2018 was launched about a year ago, in order to make the Rolls-Royce Power Systems fit for the future. Thereby, the company repositions itself in markets that are shaped by volatility and regulatory challenges. During the previous year, employees working in 15 workstreams have identified in which markets, with what kind of products and with what kind of setup RRPS wants to be active in the coming years:

“The Rolls-Royce Power Systems AG, with its core brand MTU, is a proud company rich in tradition. With RRPS 2018, we ignite the next step in our development: we become more international, more digital, and more agile”, Andreas Schell provides direction for the ongoing company transformation.

Taking this into account, the company is investing specifically in the development of digital technologies, such as cloud solutions, customer oriented digital applications like service apps, and the consequent digitization of all business processes.

Additionally, Rolls-Royce Power Systems enforces its offensive in the growth region Asia, especially in China. The joint venture with the Chinese motor manufacturer Guangxi Yuchai Machinery Company, which was started last year, will start the production of motors of the MTU 4000 series in the south Chinese city Yulin at the end of 2017.

Due to ever stricter environmental regulations, the company focuses on the growing demand for innovative technologies as well as for clean motors and energy solutions. The new “Green and High-Tech” initiative will make use of the growth potential. Especially sustainable, environment friendly products and solutions for exhaust-gas treatment, alternative fuels, electrification, digitization as well as overall system capability are at the forefront of the development process. First successes can already be seen in the form of the hybrid power packs in the rail segment.

„In 2017, we will drive the company transformation forward with RRPS 2018 at full speed, continuing our chosen path – with further flexibilization of the structures and processes that we will realize in close dialogue with employee representatives”, says chief financial officer and labor director Marcus A. Wassenberg. “The transformation demands a high level of change willingness and flexibility. At the same time, we provide a maximum of job security. With the ‘agreement on employment protection’ we laid a groundwork that we can be proud of – with a strong signaling effect for the industry as well as for the whole region”, continues Wassenberg. With the agreement, the company established modern personnel tools that provide employees with new options to design their working- as well as private time more flexible. “This way, we also want to boost our attractiveness as an employer, especially regarding the younger generation”, underlines Wassenberg.