Power gen drives Rolls-Royce Power Systems’ strong first half

Rolls-Royce Power Systems reported significantly increased operating results, sales and order intake in the first half of 2024, driven largely by business activities in the power generation segment. The company cited strong demand for data center equipment, growing governmental business and effective efficiency measures as contributing factors.

Dr Jörg Stratmann

Dr Jörg Stratmann, CEO of Rolls-Royce Power Systems, also pointed to the company’s new strategy, presented in Fall 2023, which focuses on profitable growth, as well as the “intensive commitment of teams throughout the company” as influencing the company’s 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,” he stated. “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.”

He added: “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.”

For the first half of the year, Power Systems reported order intake of €2.8 bn (£2.4 bn), up 26% versus the prior year period, with a book-to-bill ratio of 1.3x. Underlying revenue was €2.2 bn (£1.8 bn), an increase of 6%.

H1 2024 saw strong demand for power generation solutions such as the mtu Kinetic PowerPack. (Photo: Rolls-Royce Power Systems)

Underlying operating profit grew by a substantial 56% to €222m (£189m), with underlying operating margin rising to 10.3% versus 7% in H1 2023. The company said the increase reflects continued commercial optimization benefits across all categories, notably in Power Generation, and cost efficiencies. A higher underlying operating profit margin is expected in H2 2024, reflecting the typical seasonality of the business.

Trading cash flow was reported at €142m (£121m) with a conversion ratio of 64%, compared to €24m (£22m) and 18% last year, with the increase mainly attributed to increased operating profit.

On July 31, Power Systems completed the disposal of the off-highway engines business in the lower power range with the completion of its agreement with Deutz. Power Systems continues to develop a hydrogen reciprocating engine. In the Power Generation segment, it stated it has won major battery energy storage systems (BESS) contracts, including a contract with Latvia to install one of the largest BESS in the EU.

Deutz, Rolls-Royce transaction completed Deutz takes over sales and service for select Rolls-Royce off-highway engines