£963m
Marine aerospace sales 2004
£67m
Marine underlying profit before interest 2004
It has been a year of steady progress for the marine business with
growth in naval markets and a recovering commercial sector.
In the naval market sector, our MT30 gas turbine programme continues to gather momentum. Lockheed Martin selected the engine for the first prototype in the US Navy’s Littoral Combat Ship (LCS) programme. This new coastal defence vessel will also be powered by Rolls-Royce Kamewa waterjets.
The MT30, which is the world’s most powerful marine gas turbine, achieved further milestones during the year by earning full naval and commercial certification. The engine completed both the endurance test running for American Bureau of Shipping certification and gained DNV (Det Norske Veritas) design approval.
The MT30 programme reflects a core Rolls-Royce philosophy, which is to invest in technology once and then reap the rewards across our different market sectors. The engine has 80 per cent commonality with the Trent 800 aero engine, developed for the Boeing 777.
The first MT30 to be delivered was handed over to Northrop Grumman in early 2004 as part of the land-based demonstrator for the US Navy’s DD(X) destroyer programme. Rolls-Royce is therefore well positioned on both DD(X) and LCS programmes when they move into full production.
The two largest warships ever to be built for the Royal Navy will be powered by the MT30. The engine has been nominated for the two aircraft carriers (CVF) and interest has also been expressed for the next generation of French aircraft carrier – the PA2.
Our submarine business accounted for 54 per cent of our naval sales. Our manufacture and support of nuclear propulsion systems for the UK’s submarine fleet stretches back to the 1960s and our expertise and technology is acknowledged as being world-class.
This success moved onto a new level during the year when Rolls-Royce was awarded the NATO Submarine Rescue System contract by the UK Ministry of Defence, acting on behalf of the UK, France and Norway. The contract recognises our ability to act as project manager for the design, build and support of the new system over a ten-year period. The system will also be equipped with the revolutionary Rolls-Royce sodium/nickel chloride ZEBRA batteries, which have almost twice the energy density, in a reduced volume, compared to traditional lead/acid installations.
During 2004 our commercial business supplied the largest waterjets ever made for the Japanese Techno-Superliner ferry, which will begin operations this year on 16-hour voyages between Tokyo and Ogasawara-Gunso. The waterjets will help propel the 140m long, aluminium ferries at a service speed of 38 knots.
The offshore market recovered strongly in the second half of 2004, when we announced firm orders worth £166 million to supply design and equipment packages for service and support vessels in the offshore oil & gas industry. Demonstrating our ability to supply complete systems, we are designing and will help equip 26 new support vessels, based on our UT-Design. Nearly 500 of these ships are in service or are on order since their introduction in the mid-1970s. They showcase our ability to integrate design, control, automation and propulsion equipment into a single package.
We are enhancing our sales opportunities by taking offshore technology into new markets. We have diversified into the coastguard sector by supplying coastal protection vessel design and equipment packages to France and Norway and pollution control variants to India, all based on the UT-Design.
In what we believe may herald a new growth market for us, ABG Shipyard, the largest private yard in India selected Rolls-Royce to design and provide equipment for three Indian coastguard ships which will prepare them for potential environmental crises such as oil spills. The 3,300 tonne ships will be equipped with a range of Rolls-Royce propulsion, steering and motion control equipment with the first due for delivery in 2006.
Another new technology we launched in 2004 was the Azipull thruster which is being fitted to inshore tankers and some UT-Designs. The new thrusters allow higher speeds and more stable running than traditional propulsors and can create extra space on ships.
Revenues from aftermarket business or service streams have continued to grow. In 2004, the marine business made around 41 per cent of its sales from services. This market is growing as more navies acquire gas turbine technology. During the year we provided refurbished gas turbines for two ex-Royal Navy Type 22 frigates entering service with the Romanian Navy. Orders were also signed with the Chilean Navy to service gas turbines for the next 20 years on five new ships in its fleet. A key element of Chile’s transformation of its fleet to gas turbine technology. In commercial markets, where the service business has not been as large in relation to manufacturing, a significant growth opportunity exists and we are looking at ways of developing this further.
Much of the world’s shipbuilding now takes place in Asia and our structures reflect this regional shift. We gained orders from the Republic of Korea Navy for nine AG9140RF gas turbine generator sets, which will be supplied to the Republic’s KDX III destroyer programme in partnership with Samsung. We are also providing propellers and associated equipment and services for the same ships in conjunction with Doosan Heavy Industries. Such agreements are part of the Rolls-Royce strategy for growing its marine business in North East Asia.
In 2005 we are opening a factory in Shanghai, to manufacture marine equipment. We have a similar operation in Korea. Our goal is to be closer to our customers and position the business to reflect the emerging global shipbuilding markets while retaining core technical skills in the UK, North America and the Nordic countries.
| Marine | 2004 | 2003 | 2002 | 2001 | 2000 |
| Turnover £m | 963 | 1,003* | 984 | 827 | 751 |
| Underlying PBIT £m | 67 | 78* | 82 | 73 | 67 |
| Net assets £m | 567 | 577* | 550 | 513 | 582 |
| Order book – firm £bn | 1.4 | 1.2* | 1.3 | 1.3 | 0.8 |
| Employees | 7,100 | 7,300* | 6,500 | 6,500 | 6,500 |
| * restated following the transfer of the diesel business from energy to marine. | |||||
In the naval market sector, our MT30 gas turbine programme continues to gather momentum. Lockheed Martin selected the engine for the first prototype in the US Navy’s Littoral Combat Ship (LCS) programme. This new coastal defence vessel will also be powered by Rolls-Royce Kamewa waterjets.
The MT30, which is the world’s most powerful marine gas turbine, achieved further milestones during the year by earning full naval and commercial certification. The engine completed both the endurance test running for American Bureau of Shipping certification and gained DNV (Det Norske Veritas) design approval.
The MT30 programme reflects a core Rolls-Royce philosophy, which is to invest in technology once and then reap the rewards across our different market sectors. The engine has 80 per cent commonality with the Trent 800 aero engine, developed for the Boeing 777.
The first MT30 to be delivered was handed over to Northrop Grumman in early 2004 as part of the land-based demonstrator for the US Navy’s DD(X) destroyer programme. Rolls-Royce is therefore well positioned on both DD(X) and LCS programmes when they move into full production.
The two largest warships ever to be built for the Royal Navy will be powered by the MT30. The engine has been nominated for the two aircraft carriers (CVF) and interest has also been expressed for the next generation of French aircraft carrier – the PA2.
Our submarine business accounted for 54 per cent of our naval sales. Our manufacture and support of nuclear propulsion systems for the UK’s submarine fleet stretches back to the 1960s and our expertise and technology is acknowledged as being world-class.
This success moved onto a new level during the year when Rolls-Royce was awarded the NATO Submarine Rescue System contract by the UK Ministry of Defence, acting on behalf of the UK, France and Norway. The contract recognises our ability to act as project manager for the design, build and support of the new system over a ten-year period. The system will also be equipped with the revolutionary Rolls-Royce sodium/nickel chloride ZEBRA batteries, which have almost twice the energy density, in a reduced volume, compared to traditional lead/acid installations.
During 2004 our commercial business supplied the largest waterjets ever made for the Japanese Techno-Superliner ferry, which will begin operations this year on 16-hour voyages between Tokyo and Ogasawara-Gunso. The waterjets will help propel the 140m long, aluminium ferries at a service speed of 38 knots.
The offshore market recovered strongly in the second half of 2004, when we announced firm orders worth £166 million to supply design and equipment packages for service and support vessels in the offshore oil & gas industry. Demonstrating our ability to supply complete systems, we are designing and will help equip 26 new support vessels, based on our UT-Design. Nearly 500 of these ships are in service or are on order since their introduction in the mid-1970s. They showcase our ability to integrate design, control, automation and propulsion equipment into a single package.
We are enhancing our sales opportunities by taking offshore technology into new markets. We have diversified into the coastguard sector by supplying coastal protection vessel design and equipment packages to France and Norway and pollution control variants to India, all based on the UT-Design.
In what we believe may herald a new growth market for us, ABG Shipyard, the largest private yard in India selected Rolls-Royce to design and provide equipment for three Indian coastguard ships which will prepare them for potential environmental crises such as oil spills. The 3,300 tonne ships will be equipped with a range of Rolls-Royce propulsion, steering and motion control equipment with the first due for delivery in 2006.
Another new technology we launched in 2004 was the Azipull thruster which is being fitted to inshore tankers and some UT-Designs. The new thrusters allow higher speeds and more stable running than traditional propulsors and can create extra space on ships.
Revenues from aftermarket business or service streams have continued to grow. In 2004, the marine business made around 41 per cent of its sales from services. This market is growing as more navies acquire gas turbine technology. During the year we provided refurbished gas turbines for two ex-Royal Navy Type 22 frigates entering service with the Romanian Navy. Orders were also signed with the Chilean Navy to service gas turbines for the next 20 years on five new ships in its fleet. A key element of Chile’s transformation of its fleet to gas turbine technology. In commercial markets, where the service business has not been as large in relation to manufacturing, a significant growth opportunity exists and we are looking at ways of developing this further.
Much of the world’s shipbuilding now takes place in Asia and our structures reflect this regional shift. We gained orders from the Republic of Korea Navy for nine AG9140RF gas turbine generator sets, which will be supplied to the Republic’s KDX III destroyer programme in partnership with Samsung. We are also providing propellers and associated equipment and services for the same ships in conjunction with Doosan Heavy Industries. Such agreements are part of the Rolls-Royce strategy for growing its marine business in North East Asia.
In 2005 we are opening a factory in Shanghai, to manufacture marine equipment. We have a similar operation in Korea. Our goal is to be closer to our customers and position the business to reflect the emerging global shipbuilding markets while retaining core technical skills in the UK, North America and the Nordic countries.