Rolls-Royce mulls sale of commercial marine business

The group will conduct a strategic review of the commercial marine division while retaining its naval marine business, incorporating it into the civil defence division – one of three core units alongside civil aerospace and power systems. The nuclear submarines business will be absorbed in the civil defence division, while the civil nuclear operations will fall under power systems.

Warren East, CEO, Rolls-Royce, said: “The commercial marine operation… 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.”

The marine division, of which commercial marine accounts for 75% of revenues, made a loss of £27 million on revenues of £1.14 billion in 2016. Rolls-Royce noted that the business is still suffering from weak demand evident since 2015 in the offshore oil and gas sector. As a result, it has reduced its commercial marine sites by 40% and its workforce by 30% since 2015.

The commercial marine division hosts a wide range of equipment and ship design functions but excludes the Bergen and MTU engine businesses, which fall under the group’s power systems business. However, reports in mainstream UK media over the past week suggest that elements of the power systems division – notably fuel injection specialist L’Orange – could also be sold.

Rolls-Royce said that it will retain the marine operations which supply complex power and propulsion systems to naval customers, and will continue to have an engine business serving marine customers under the power systems.

The strategic review will be conducted this year. Further details of the simplification will be revealed when Rolls-Royce announces its 2017 results in March.