Intro

Today, we are breaking down Rolls-Royce. A fair warning to those expecting to hear about luxury automobiles, that division was split from this business in the 1970s. But as we discuss the history of Rolls-Royce on this episode, you will hear how the DNA of this company still ties together from its early 1900s origins.

Our guest is Graeme Forster from Orbis Investments. Graeme walks us through the core business of Rolls-Royce in the aerospace market, the evolving duopoly of the wide-body aircraft engine manufacturers, and the ups and downs of properly capturing the economic opportunity. I really appreciated Graeme's intellectual honesty in discussing Rolls, and I expect you will, too. Please enjoy this Breakdown on Rolls-Royce

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Show Notes

(00:00:00) Welcome to Business Breakdowns

(00:04:54) Overview of Rolls-Royce

(00:08:35) History and Evolution of Rolls-Royce

(00:10:44) Rolls Royce's Aerospace and Defense Ventures

(00:11:57) Challenges and Nationalization

(00:14:43) Current Business Segments and Market Position

(00:20:57) Service Agreements and Profitability

(00:27:41) Engineering Excellence vs. Commercial Strategy

(00:31:26) The Aerospace Business Ecosystem

(00:33:11) Rolls-Royce's Margin Profile

(00:35:13) Challenges and Changes in Management

(00:37:28) Cost Structure and Revenue Optimization

(00:38:32) Engine Performance and Development

(00:40:04) Market Dynamics and Competition

(00:49:13) Future of Nuclear Reactors

(00:52:46) Capital Allocation and Management

(00:56:08) Lessons from breaking down Rolls-Royce