As Rolls-Royce today announced a record pre-tax loss of $7.1bn after the coronavirus pandemic caused a global slump in air travel, the group’s Power Systems division has revealed it has managed to stay in the black.
First-half results for Rolls-Royce’s Power Systems saw adjusted revenue down 11% to $1.6bn yet it remains upbeat having generated $29m of underlying profit.
“Despite the unprecedented scenario in which the global economy finds itself due to Covid-19, we have actively managed the economic impact on Power Systems in the first six months of 2020,” said Rolls-Royce Power Systems chief executive Andreas Schell.
“We identified this problem at an early stage and took a number of countermeasures. The challenge of focusing effort on shielding our employees from infection while continuing to serve customers to the best of our abilities has been met despite the prevailing headwinds.”
Looking back over the first half of 2020, chief financial officer Louise Öfverström said the drop in revenue is due to “noticeable reluctance on the part of customers to invest in new equipment, although the falls varied from application to application”.
“Our diversified positioning across a range of applications covering 13 markets has once again proven to be the right one and has had a stabilizing effect on our business.”
Sales in the power generation market remained stable due to increased investments of data center customers safeguarding their electrical power systems against unexpected outages.
“The lockdowns have made us all keenly aware of the primary importance of keeping data flowing. Our systems help secure power supplies to many safety-critical facilities such as data centers, server parks, and hospitals too,” said Schell.
He explained that “in some areas, we have adjusted production to this lower demand scenario, using measures such as short time work at German sites. However, at no point did operations have to come to a halt, despite challenges in our global supply chains.”
He added that signs of recovery are now emerging in some applications and markets, and cited China. “State rescue programs and the easing of Covid restrictions, where feasible, will help bring about recovery. That said, whether and to what extent a recovery will occur also depends on what happens to the infection rate, and how that impacts the economy.”
He said Power Systems’ end markets are expected to return to pre-Covid levels by the end of 2021 and added that the company would be using the time between now and then to press ahead with its business strategy to transform itself into a provider of integrated, net-zero-carbon solutions.
“The announcement of our collaboration with Daimler and its partner Volvo in using commercial vehicle fuel cells in distributed power supply systems has made our customers and the industry sit up and take notice.”
“Work is already underway on a demo system due to go into operation in early 2021. “This will be a real alternative for many, especially if the fuel cells run on green hydrogen produced from renewable energy sources.”
In January, Rolls-Royce acquired a majority stake in Berlin start-up Qinous, renaming it Rolls-Royce Solutions Berlin. The battery storage specialist is the heart of a new Microgrid Solutions business unit at Power Systems, pulling together all activities associated with local, intelligent power grids.
Power Systems is also reinforcing its core business with the addition of Belgian company Kinolt, a specialist in uninterruptible power supplies, which was acquired in July.
This move sees Power Systems grow its line-up of integrated total solutions for emergency power supplies used in safety-critical environments such as data centers and industrial facilities housing sensitive production processes.