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Rolls-Royce highlights its African presence, and delivers record results for 2023

23rd February 2024

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

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UK-based global major propulsion and power systems group Rolls-Royce has highlighted its presence in Africa. It did so in parallel with the release of its full-year results for 2023. The group’s businesses active across the country are Power Systems, Civil Aerospace, and Defence. “We have extensive organic growth across the continent; this demonstrates our potential,” affirmed the group. “Our innovative products and services have an important role to play in the sustainable development of the continent.”

Rolls-Royce Power Systems has offices in Cape Town, Johannesburg and Nairobi, as well as a satellite office in Zambia, directly employing 150 people. It has a workshop in South Africa, which employs 22 people and rebuilds an average of 30 engines/year. It also operates through third-party distributors and systems developers and integrators.

In Africa, Power Systems specialises in large engines, distributed energy systems, and propulsion systems. Its product range also includes gas and liquid fuel reciprocating engines for electricity generation and storage. Its products serve in mining, rail, marine, industrial and datacentre applications. In Southern Africa, the number of the division’s natural gas and biogas generators is also increasing.

In regional terms, Power Systems is active in all the countries of Eastern and Southern Africa, as well as several countries in North and West Africa. Some of the company’s largest installed footprints (via third parties) are in Angola, Ghana, Mozambique and Nigeria.

South Africa and Zambia contain major clients in the mining sector. These include, but are not limited to, Anglo American, Barrick and First Quantum. In South Africa, the business has long-term maintenance contracts, known as Value Care Agreements (VCAs), with four customers, 124 in-service engines and 27 employees. In Zambia, it has three VCA customers, 56 in-service engines and 17 employees.

Civil Aerospace provides engines for airliners and business jets. In Africa, its engines power widebody airliners operated by 23 African airlines. More than 49 of the 113 widebody airliners flown by African airlines are powered by Rolls-Royce engines, a current market share of 44%. More than 95 regional airliners flown by African airlines also use Rolls-Royce engines. In terms of orders, 74 out of 88 widebody airliners being acquired by African airlines will use Rolls-Royce engines. When these orders are fulfilled Rolls-Royce’s market share in this segment of African commercial aviation will increase to 61%.

The division’s biggest single customer in Africa is Ethiopian Airlines, whose Rolls-Royce-powered fleet comprises ten Boeing 787s and 20 Airbus A350-900s, with four A350-1000s on order.

The group’s defence business serves “many” African militaries, including the Defence Forces of Algeria, South Africa and Tunisia.

As for the group’s full-year results for last year, it reported an underlying operating profit of £1.6-billion and an underlying margin of 10.3%. It achieved a record free cash flow of £1.3-billion, and its return on capital more than doubled, to 11.3%. Statutory net cash flow from operating activities was £2.5-billion, a year-on-year increase of £1-billion. Net debt was £2-billion, a significant reduction from the £3.3-billion recorded at the end of 2022. For 2024, the group guided that it expected an underlying operating profit of between £1.7-billion and £2-billion, with a free cash flow of between £1.7-billion and £1.9-billion.

“Our transformation has delivered a record performance in 2023, driven by commercial optimisation, cost efficiencies and progress on our strategic initiatives,” highlighted Rolls-Royce CEO Tufan Erginbilgic. “This step-change has been achieved across all our divisions, despite a volatile environment with geopolitical uncertainty, supply chain challenges and inflationary pressures.”    

Edited by Creamer Media Reporter

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