Energy

Energy
H1 11 H1 10 +/-
Order book (£bn)1.01.2*-17%
Engine deliveries3828+36%
Underlying revenues (£m)600590+2%
Underlying OE revenues (£m)345348-1%
Underlying services revenues (£m)255242+5%
Underlying loss before financing (£m)(1)(19)

*Full year 2010 data

Financial

  • Despite an 11 per cent increase in new orders to £424m (£381m in H1 2010), the order book declined by 17 per cent reflecting mainly the phasing of orders to the second half.  High oil prices are supporting progress in new projects around the world, creating future demand for our products and services.
  • The traditional power generation market remains suppressed and industrial demand has not yet fully recovered to pre-2008 levels, resulting in excess generating capacity in the developed world. However, this is being partially offset by greater interest from the developing economies. Significant orders in the period included:
    • Six RB211 compressor units for PetroChina’s WEPP Line 2 East Project.
    • Nine Bergen diesel engines to Lukoil in Russia.
    • A 20-year contract to supply safety-critical nuclear services to CEZ in the Czech Republic.
  • Revenues were similar to 2010 with stable contributions from Power Generation and Oil & Gas.
  • The £18m improvement in performance, resulting in a loss of £1m for the half year, was due mainly to non-recurring industrial Trent retrofit charges in the first half of 2010.

Portfolio

  • The newly announced facility in Brazil to assemble and test RB211 gas turbine packages for the Brazilian Oil & Gas market is expected to be operational in 2012.
  • The 500kW tidal power turbine has continued testing at the European Marine Environmental Centre.
  • Memoranda of Understanding with Westinghouse Electric Co, Areva and EDF SA have been developed further to collaborate in the provision of civil nuclear services.
  • Improved Power Generation activity in developing markets is creating new opportunities. Our involvement with Tognum will position us better to respond to these opportunities and establish a broader platform for growth.

Full Year Outlook

  • Revenues are expected to be broadly similar to 2010 in both OE and services.
  • Profit is expected to be broadly similar to 2010, which is lower than previously expected.
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