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Rolls-Royce review could see commercial marine business sold

The market downturn led Rolls-Royce to invest in new marine technologies, including remote operation of vessels The market downturn led Rolls-Royce to invest in new marine technologies, including remote operation of vessels

Rolls-Royce has announced that it intends to conduct a “strategic review” of its commercial marine business, which could see these operations sold off as it looks to narrow its focus and concentrate on the aerospace, defence and power systems markets.

{mprestriction ids="1,2"}This review will be undertaken during 2018 and Rolls-Royce says that it will update the market of the outcome of this process “at the appropriate time.”

“Building on our actions over the past two years, this further simplification of our business means Rolls-Royce will be tightly focused into three operating businesses, enabling us to act with much greater pace in meeting the vital power needs of our customers,” said Rolls-Royce CEO, Warren East.

The company says that its commercial marine business has had to deal with weak demand for products and services in the offshore oil and gas market since 2015, which significantly impacted its profitability.

These changing market dynamics have led Rolls-Royce to invest in new technologies in maritime, with the company having been particularly prominent in the fields of ship intelligence and autonomous vessels, culminating a June 2017 demonstration in Copenhagen harbour of the world’s first remotely operated commercial vessel.

“This is the right time to be evaluating the strategic options for our commercial marine operation,” said Mr East.

“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.”

In 2016, Rolls-Royce’s marine division contributed more than £1 billion in revenue, however this represented a loss to the company of £27 million. The commercial marine business accounted for 75 per cent of these revenues and all of the losses, with naval operations generating 25 per cent of revenues and achieving a small profit.

Rolls-Royce intends to restructure the marine division to place the naval section of the business within its defence operations, separating out the commercial marine activities.{/mprestriction}

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