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Peakdread,
Only yesterday stumbled across a whole new product line from Rolls that I was totally unaware of - Orpheus small engines .
https://x.com/RollsRoyce/status/1790653728594223428
Decision in principle. Looks like rather than going all in with one supplier most if not all countries are going to have a mix of suppliers and various sites. Distributed power makes sense as relying even more on an electric grid for basic energy supply across the board is going to require vast investment in the grid to balance the supply / demand. The sweet spot for wind has already been hit in many places and the struggle is to distribute the power at peak times and then fill the gaping hole in production when the wind stops, it is not a solution.
Billy101203,
Makes a lot of sense, in the end better off looking if line going up or line going down and if you can relate that to whatever knowledge you have about the company in terms of news, market, commentary. The time to worry is when there is no sensible reason for counter movements which make no sense. The recent lull is looking very much like the large pressure from tax related sales and no overlapping company calendar events, plus some general market jitters, it is still impressive how regardless the share price has drifted right back up to the highs, a significant sign of strength and obviously bodes well.
Accipiter, we've been set up, lucky to not already have power outages the last few years, you need reliable baseload, no getting round that unless you spend extraordinary sums of money on battery storage. I think plenty in the rest of Europe realise this, our government not so much or they care even less. The only financially viable baseload if you are not going to burn fossil fuels is nuclear.
NTC,
Quiet in here, seems that a lot have gone to bed, overslept and forgotten about breakfast.
I don't think Tufan was joking about hurrying up. The UK govt may be happy with a rudderless (nay self destructive) energy policy and happy paying 5x the cost in China for energy. Others out there on the continent may actually believe differently and think that preserving their industrial base somewhat essential and requiring urgent attention/action.
Svend, no problem, wasn't inferring that you were inferring that ;-) Vaguely remember something like an expected 10% jump but looks like we might see even more. It might not change overall flight numbers much but will lift airline utilisation factors and profitability which has to be a good thing for the whole industry and future purchasing commitments.
Svend, thanks, not looking to misrepresent anything, flagged up on Kobeissi Letter on Twitter and thought I'd got the current stat link. It is apparently up there at record 22% level still (from the chart they posted showing 2024 intentions).
Remarkable uptick in percentage of US citizens looking to travel and holiday abroad over the next 6 months. Expectations were for a sustained growth in civil flying hours but even that might have been an underestimate if anything like this stat is replicated elsewhere. Intentions peaked at around 15% pre pandemic, now standing at over 21%. Is there even the spare capacity to accommodate this?
https://www.reuters.com/world/americas/record-number-americans-plan-traveling-abroad-next-6-months-2023-08-29/
Europe's and UK's energy supply is a mess, the transition to Net Zero is a fools errand anyway but that is not the point, what is being proposed will put the energy supply and electricity supply in particular under such enormous strain that unless there are very significant and quick improvement we'll be seeing blackouts and if we get anything like a bad winter. Whole scheduled blackout sequences were drawn up a couple of years ago for the UK. Specific to EV's away from home charging rates have got to the price point where it is pretty much cheaper to drive a petrol/diesel vehicle so even now this early in their rollout users are doing the basic maths and working this is not going to work for them. Same goes for the economics in retrofitting heat pumps.
Solar - fine in summer and swing season months, useless in winter, wind - fine when it is windy, useless when calm. you still need huge baseload to fill the gaps. If you are not going to power gas or coal generators you need to generate that electricity somehow, hence there is a huge need for the rollout pretty damned quickly of something to replace the capacity that has already been demolished. |Every single EV sold is putting further pressure on the grid and generation generation. It is no coincidence that new regs ensure fully connected home chargers, government are already setting up the situation where they can all be turned off remotely to prevent either local power cuts or worse large sections of the grid falling over.
"I don't see how we have the additional skill set or supply chain volumes necessary"
Would have thought CNC machinery will take care of most of that (internally or externally contracted). Once you have the appropriate programming sorted if you have the space then going from x machines to 2x machines is not rocket science. Set up time and just monitor the machines do their stuff or just make larger batches of each component as you go and save on set up time. Accountants don't like factory input costs and work in progress but sod it if you have kit to make, just make more and store more ready for assembly.
"Royce's are going to run out of capacity at this rate - just how many engines can they catually build???"
As from 2025 after the recently announced £55m investment across the board the main plant in Derby is supposed to be able to produce and support 40% more than the running production from the decade earlier. Investment going into German plant too. Seems like an aggressive target, CEO doesn't seem to be your average plodder. so who knows, we'll see.
OJ, no good getting loads of contracts if you don't make money on them, the big overhaul of the mix of products and costs is part of the re-rating. If you run a tight a tight ship and also increase your turnover with new ranges of products then it is a double win.
Comment in regards operating margins.
Civil Aerospace has the biggest step change, improving from 2.5% in 2022 to 15-17%.
In Defence we plan to improve from 11.8% in 2022 to 14-16%.
In Power Systems, our shortest cycle and most diverse business, we plan to improve from 8.4% in 2022 to 12-14%.
Retirment, don't get the interest rate thing at all, yes good for the market but absolutely nothing to do with RR. materially. The growth in civil the next decades is in Asia. If we're skint thanks to mortgage payments yes civil miles will be effected. Nothing like significant proportions of Europe's manufacturing shutting down thanks to short / unfordable energy supply. If anything the rest of the market going down will highlight the potential winners that have growth and potential in them and invest accordingly.
Oj, pre pandemic the whole of Europe and UK still had a largely functional energy market supply, there was no talk of rolling blackouts and industry shutting down thanks to energy price/availability. 30/40% inflation price changes since - anybody's guess really as numbers are rigged. Also nobody really saw much immediate requirement for having to replace military hardware. Basically the situation is not even comparable. If a company is lucky enough to have strong footing in all those camps with a good CEO all bets are off.
The biggest threat to Apple is AI , it could be a pretty existential one for them. Nobody knows where AI goes in terms of interfaces - Visual / Audio / Neural even. Nobody knows how far models will go in terms of their ability to code and dramatically reduce the time to create a whole software ecosystems and nobody knows what hardware that AI is going to run on in a handheld form - have a look at the Rabbit R1, a product you've likely not heard of that came out of nowhere.
Barriers to entry for well established companies are important in terms of valuation, RR's are much higher.
Accipiter, same goes for a lot of northern europe, cold climates need copious energy, shutting down your existing energy supply was never sensible choice before an alternative is in place. RR could make notifiable steps towards SMR introduction with a list of countries in Europe at any point in time, including before UK decisions are made. Germany on the sidelines as they have canned nuclear politically, southern europe with better climate and solar a more viable reliable source of year round energy are also not likely first / major adopters. High energy costs are crippling european manufacturing and personal living standards so the political pressure is high for pushing through some plan to tackle the problem. The CEO may not have been bluffing in regards needing to make a decision promptly.
Terrapower - they failed to mention in that article that the fuel supply that design needed was from Russia, putting it at least two years behind schedule. Agree though, no trust at all in UK political decision making process.
Tufan doesn't seem like a character that is going to bluff and hang about, if the deals are ready to go elsewhere other countries may get a bigger slice of the spin off investment from rollout.
Might be due to being bounced around at key trading level - top of channel and resistance line, right old ding dong going on. 3 bites already around the 380 mark, if it breaks through it not much stopping it, or the bears win short term and it goes lower within the channel. All the time (for now) though trend in upgrades and broker estimates is rising adding more pressure to upside.