Rolls-Royce may sell off commercial marine business

JANUARY 17, 2017 — Rolls-Royce said today that it is looking at the “strategic options” for its commercial marine operation and planning a reduction from five operating businesses to three core units that will see its naval marine and nuclear submarines operations consolidated with its existing defense business.

Rolls-Royce says that since 2015 its marine business has “responded to weak demand for products and services for the offshore oil and gas market, which significantly impacted its profitability. It has divested non-core businesses and reduced the number of sites from 27 to 15 – an overall reduction in footprint of 40%. It has managed a reduction in its workforce by 30% to 4,200, with the majority now based in the Nordic region. At the same time, the business has been investing in new facilities and new technologies and become an industry leader in the fields of ship intelligence and autonomous vessels, culminating in June 2017 with the successful demonstration, in Copenhagen harbor, of the world’s first remotely operated commercial vessel. Given the progress the business has already made, it is now an appropriate time to conduct a strategic review of Commercial Marine. This review will be undertaken during 2018 and we will update the market of the outcome at the appropriate time.”

Chief Executive Warren East said: “This is the right time to be evaluating the strategic options for our Commercial Marine operation. The team there has responded admirably to a significant downturn in the offshore oil and gas market to reduce its cost base. At the same time, we have carved out an industry-leading position in ship intelligence and autonomous shipping and it is only right that we consider whether its future may be better served under new ownership.”

Regardless of the outcome of this strategic review, Rolls-Royce will retain the marine operations which supply complex power and propulsion systems to naval customers, including the Royal Navy and U.S. Navy. During the first quarter of 2018, these operations will become part of an enlarged defense business named Rolls-Royce Defence.

Rolls-Royce says it “will also continue to have a successful engine business serving marine customers within Power Systems.”

Rolls-Royce Power Systems AG, headquartered in Friedrichshafen, Germany, is the parent of the MTU, Bergen Diesel and L’Orange brands.

Rolls-Royce Chief Financial Officer Stephen Daintith, said that “further broad details of the restructuring will be given alongside our 2017 financial results. Within those results we will report our Marine and Nuclear businesses as separate units, as in prior years.