Flying high
Industrial engine giant Rolls-Royce reported this week that its underlying revenue hit £12.7bn in 2022 ($15.2bn), up from £11bn the year prior. The substantial 57% jump in underlying profit is a good start for new CEO Tufan Erginbilgic, with shares rising 20% on the news.
Although the Rolls-Royce name may be more synonymous with luxury vehicles, the brand is actually split between the engine-maker Rolls-Royce Plc and Rolls-Royce Motor Cars Ltd. — the latter of which has been owned by BMW Group since 1998.
New pilot at the helm
With roots back to 1906, the present-day Rolls-Royce Plc is actually by far the larger of the 2 companies and is a complicated entity in the business of propulsion and power.
Accounting for ~45% of the company's underlying revenue is its civil aerospace business, which sells passenger jet engines, making most of its money from long-term service arrangements. Those revenues depend partly on how many “flying hours” each engine racks up: more flying hours = more maintenance = more revenue. That business was severely dented during the pandemic, leading to the loss of some 9,000 jobs.
Beyond passenger jet engines, Rolls-Royce also has a huge power division, which makes engines for yachts and trains, as well as an enormous defense business. The division saw order intake more than double last year after winning major contracts with the US Army with “increased military activity and spending” helping to “underpin the long-term outlook” of the business.
