Despite the uncertain market and macro-economic conditions, a resilient performance was achieved in 2011, as demand for our products and services gradually returns. New order intake during the year was strong, up 15 per cent to £2.1 billion, although the order book decreased largely due to the slower than expected conversion of OE bid activity to new orders.
Revenue decreased 12 per cent, impacted mainly by slow second half OE revenue that resulted in OE revenue for the full year down 23 per cent. This slower than expected recovery of OE revenue was partially offset by a nine per cent increase in underlying service revenue. Our expanding network of service centres continues to take advantage of the growth in recent years of the global fleet of vessels equipped with our products, engines and propulsion systems.
Profit declined by three per cent relative to a fall in revenue of 12 per cent, reflecting an improved revenue mix and an increased focus on costs and operational performance.
Significant increase in new orders and continued growth in offshore oil and gas sector
First contract secured for award-winning NVC 405 Environship liquid natural gas-powered cargo vessels
Service centres in Europe, Africa and Asia opened or expanded
Customer training and simulator centres opened in Norway and Singapore
Tognum acquisition largely completed
|Order book £bn||4.7||5.2||3.5||3.0||2.7|
|Underlying revenue £m||1,548||2,204||2,589||2,591||2,271|
|Underlying OE revenue £m||1,003||1,492||1,804||1,719||1,322|
|Underlying service revenue £m||545||712||785||872||949|
|Underlying profit before||113||183||263||332||323|
Rolls-Royce has a world-leading range of capabilities in the marine market, encompassing vessel design, the integration of complex systems and the supply and support of power and propulsion equipment. We are leaders in mission-critical systems for offshore oil and gas, merchant and naval vessels.
Marine performed strongly in the offshore oil and gas sector. This was largely based on the proven success of our specialist UT vessel design capabilities and our proficiency at integrating sophisticated systems into complex ships.
As the industry continues to explore ever deeper waters, like those in the South Atlantic off the coast of Brazil, we will continue to be a strong partner for our customers for offshore oil and gas exploration, production, service and support.
We continue to invest in technology that addresses the need for more efficient and environmentally sustainable power and propulsion systems.
Our successful design and systems integration approach was validated in 2011 through an order by NorLines for two award-winning NVC 405 Environship short sea cargo vessels. These vessels incorporate a wave-piercing hull, a liquid natural gas engine and an integrated rudder and propeller system, which, in combination, reduces fuel consumption and cuts CO2 emissions by up to 40 per cent compared to conventional vessels.
Power and propulsion equipment was delivered for the UK’s Queen Elizabeth class aircraft carriers. In early 2011, we received an order from Lockheed Martin for the provision of MT30s, the world’s most powerful marine gas turbine, to power a further ten US Navy Littoral Combat Ships. The MT30’s success on this programme is generating interest from navies in Europe, Asia and South America.
We have established a naval ship design team, specifically to address the growing opportunity in the patrol craft and support ship market. The business now has ship design teams for each of the offshore, merchant and naval sectors.
The submarines business celebrated the UK Government’s decision in May 2011, to replace the UK’s Vanguard class nuclear submarine with a new design of submarine utilising the Group’s Pressurised Water Reactor (PWR) Generation 3 reactor technology.
We expanded our service capacity to better realise the significant opportunity that our large installed base of equipment represents. Five facilities in Namibia, the Netherlands, Poland, Germany and Hong Kong were either constructed or expanded during the year. We also continued developing our service related capabilities by enhancing our spare parts delivery network and opening customer training facilities in Norway and Singapore.
Through our joint venture with Daimler, we largely completed the acquisition of Tognum, which owns world-class high-speed reciprocating engine manufacturer MTU Friedrichshafen and subsequently, in January 2012, contributed our Bergen medium-speed engines business into the new entity. The benefits of these complementary technologies create greater design and power and propulsion systems integration opportunities across marine, particularly for our naval and merchant businesses.
Access to a large installed base of equipment, and a mature customer support network, creates further growth opportunities.