Energy

Energy
£ millions20122011*Change

Order book

1,2901,420-9%

Underlying revenue

9621,083-11%

Underlying OE revenue

344527-35%

Underlying services revenue

61855611%

Underlying profit before financing

211631%

Return on sales**

2.2%1.5%0.7pp

   *    2011 restated due to the transfer of Bergen to Engine Holding on 2 January as per Note 2 on p.20
**   By reference to underlying profit before financing costs and tax

Financial

  • The order book reduced by nine per cent, with new orders of £0.8bn (£1.3bn in 2011). In the oil & gas market, high oil prices and global growth continue to sustain bid activity, albeit with pricing pressures and order deferrals by some customers. While the power generation market in mature economies remains suppressed, we are seeing growth in developing countries. We continue to invest for future growth in Civil Nuclear.

    Significant orders in 2012 included:

    • A contract with Petrochina to supply a further six RB211 gas turbine compression packages for Line 3 of the West-East Pipeline Project (WEPP).
    • A contract with Uzbekistan to supply three RB211 units for the Uzbekistan section of the Asia Trans Gas (ATG) pipeline to transport gas from Turkmenistan to China.
    • A contract to supply two industrial Trent 60 WLE gas turbines to generate power for LUKOIL's plant in Russia.
    • A contract to supply a Trent 60 WLE gas turbine to supply power for the El Alto plant in the Kenko Zone that will power over 100,000 homes in and around La Paz, Bolivia.
    • A contract to supply an RB211 to operate PTT’s Ethane Separation Plant in Thailand.
  • Revenue fell by 11 per cent due to a significant reduction in OE revenue and adverse revenue mix in Oil & Gas and in Power Generation. The OE reduction was partially offset by an 11 per cent increase in services revenue. Services revenue, particularly in Oil & Gas, benefited from a better penetration of the aftermarket for the installed base across all sectors.
  • Profit increased by five million pounds.

Portfolio

  • Agreements were signed with Areva and Hitachi to collaborate further on civil nuclear new build projects for which we will manufacture complex components and provide technical services.
  • The RB211-Gzero was launched as a retrofit upgrade product to provide increased power to many existing users of industrial RB211 aero-derivative gas turbine engines.
  • LG acquired a 51 per cent stake in Rolls-Royce Fuel Systems (US) Inc. that will enable the business to further develop and industrialise fuel cell technology. In January 2013, we sold Tidal Generation Ltd. to Alstom.
  • Construction of a new purpose-built gas turbine package, assembly and test facility in Santa Cruz in Brazil is well advanced. The facility is expected to start production in 2013.

 

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