RR engine sale complete

 Rolls-Royce has completed the sale of the lower power range  engines business of Rolls-Royce Power Systems to Deutz.  The sale follows the announcement in late 2023 of an  agreement in principle being reached and the sale price is in the  high double-digit million euro range.  The firm also reports healthy business for its latest trading period.

Dr Joerg Stratmann, CEO of Rolls-Royce Power Systems said: “This  deal follows the realignment of our strategy to focus on the supply  and maintenance of engines and systems primarily from our own  production. We are handing over a good business, an excellent  customer base and a strong team.”

As a result of the transaction, Deutz will take over the distribution  of the mtu Classic series in the lower power range and the mtu  engine series 1000 to 1500, which are based on three Daimler Truck engine platforms. These engines are in the 5-16litre  displacement class with an output of up to 480kW and used in a  variety of off-highway applications.

Power Systems will continue to use engines based on Daimler Truck  technology to power railway and military land vehicles, as well as  for power generation. The servicing activity related to engines  already in use is also part of the sale and, following a transition  phase, is expected to be covered exclusively by Deutz-authorised partners from 1 January 2025.

Meanwhile, Rolls-Royce Power Systems increased its operating results, sales and order intake in the first half of 2024. This was driven in particular by business activities in the power generation segment, with strong demand for data centre equipment, growing governmental business and effective efficiency measures.

Dr  Stratmann said: “The strength of our new strategy presented in autumn 2023, with its focus on profitable growth, and the intensive commitment of teams throughout the company is reflected in these positive business figures. This half-year result confirms our strategic course. At the same time, we are creating the financial basis to position ourselves for the future: for the first time in 20 years, we are developing a new mtu engine platform. The triple-digit million euro amount that we will be investing in this over the coming years, underlines our confidence in this technology and its contribution to a successful energy transition. We are convinced that we will create clear added value for our customers with the new mtu engine platform and set new standards in our industry.”

Order intake was €2.8bn* (£2.4bn*), 26% up versus the prior period, with a book-to-bill ratio of 1.3x. Underlying revenue was €2.2bn (£1.8bn), an increase of 6% versus the prior period.  Underlying operating profit grew by 56% to €222m (£189m), underlying operating margin rose by 3.3pts to 10.3% (H1 2023: 7.0%). The increase in underlying operating profit reflects continued commercial optimisation benefits, across all categories, notably in Power Generation, and cost efficiencies. A higher underlying operating profit margin in H2 2024, reflecting the typical seasonality of the business is expected.

Trading cash flow was €142m (£121m) with a conversion ratio of 64% versus €24m (£22m) and 18% last year.  The increase in trading cash flow was mainly due to increased operating profit.