Highlights of the year
Over the past decade we have built a world-leading marine
propulsion business with a broad product range, full systems
integration capability and access to the world’s naval and
commercial markets. Sales have grown to almost £1 billion since the
acquisition of Vickers plc in 1999 and the subsequent integration
of Vickers-Ulstein Marine Systems.
- MT30 selected for DD(X) demonstrator and UK Future
- WR-21 gas turbine deliveries for Type 45 destroyer programme on
schedule following successful factory acceptance tests.
- Queen Mary 2 now in service with Rolls-Royce
- Continued growth strategy in marine electrical systems with
acquisition of VT Controls.
- The Group’s UT-Design has received orders for offshore services
vessels that now exceed 450 units.
We have a global business with our main manufacturing operations in
North America, the UK and Scandinavia. We also have subsidiary
operations close to our customers and low cost manufacturing
operations in Poland, Korea and China.
The business is balanced between naval and commercial markets with
aftermarket sales representing 35 per cent of total sales.
Rolls-Royce equipment is operated on more than 15,000
commercial vessels, 800 offshore support vessels (450 of our own
design) and more than 2,000 warships.
As with our other businesses, a portfolio approach reduces
volatility. The support and services sector of the offshore oil and
gas market has been the main driver of growth over the last few
years. This market is now slowing down, but naval shipbuilding is
The fall in marine sales in 2003 was largely attributable to the
slow down in the offshore market. This also impacted profit before
interest, along with additional costs incurred in respect of the
introduction of new products into service.
There is a continuous drive for more complex, higher technology
propulsion systems as pressure for lower cost of operation, greater
reliability, better manoeuvrability and safety places higher
demands on the propulsion system and its design. In some sectors
this is leading to a growing demand for fully integrated system
provision and for electrical drives instead of mechanical drives.
We have responded to this market need by establishing a Marine
Electrical Systems division and we further extended our capability
with the acquisition of VT Controls in 2003.
Market developments are leading to an increased demand for gas
turbine propulsion, with its reliable, compact power and smooth,
Our product portfolio comprises world famous product names, such as
Kamewa, the acknowledged leader in high-performance propulsion
technology; UT-Design, the leader in offshore supply and support
vessels; Bird Johnson, the exclusive supplier of propellers to the
US Navy for 20 years; and Brown Brothers, the leading supplier of
stabilisers and steering gear.
We are establishing a range of gas turbines from 3MW to almost
40MW. This includes mature programmes such as the Spey and new
products, such as the advanced WR-21, which offers unrivalled
performance for high power applications and has been selected for
the Royal Navy’s Type 45 destroyer programme.
Our new products are developing strong positions in the US and
Europe – particularly in naval applications. The MT30 is the most
powerful marine gas turbine in the world, at over 36MW, and has 80
per cent commonality with the successful Trent 800 aero engine. It
has been nominated for the UK Future Carrier and has recently made
a significant break-through into the US Navy, with its selection
for the DD(X) demonstrator programme. We also expect it to be very
competitive in the commercial market in sectors such as fast
passenger, cargo and Liquefied Natural Gas (LNG) carriers. Our
smaller engines, the MT5 and AG 9140/50 are derived from our
smaller industrial gas turbines and offer auxiliary power at
In 2003, we supplied the largest water jets ever built to power a
Japanese super-ferry. Our water jets were also selected for the US
Navy’s X-Craft, an excellent example of the same technology being
supplied into both the commercial and naval sectors.
We have a strong presence in the offshore oil and gas sector where
we design vessels incorporating our own products. The highly
successful UT offshore support vessel continued to attract steady
orders for design and equipment packages and over 450 are now
delivered or are on order with customers since the design’s
inception in the mid-1970s.
We have a unique position as design authority for the propulsion
systems for the UK’s nuclear submarine fleet, where we have secured
long-term contracts to build and maintain the steam-raising plant
and related propulsion system equipment.
As in all our businesses, the longevity of our equipment creates a
substantial aftermarket opportunity. As systems become more
sophisticated, customers have a greater requirement for value-added
aftermarket services, resulting in a growing demand for Long-Term
Service Agreements. These provide long and reliable engine life for
the customer and an incremental revenue opportunity for
Our priorities are to focus investment on bringing new products to
market in sectors where we are establishing product leadership,
particularly in large marine gas turbines where we are benefiting
from our market leading products in civil aerospace. We are
continuously striving for operational excellence, greater levels of
productivity and lower costs. We are capturing the opportunity
offered by the aftermarket and, as technology and product solutions
become more sophisticated, we are benefiting from the service
capabilities being developed in other parts of the Group.
|Underlying PBIT £m
|Net assets £m
|Order book - firm £bn
|Integrated system solutions