3 days ago
Rolls-Royce aims to become UK's biggest company by market value
Rolls-Royce, Britain's engineering champion, is chasing a target of becoming the country's largest company by market value.
The company's chief executive Tufan Erginbilgic said that that could be achieved by a take-off in demand for small modular nuclear reactors for local power stations being commissioned to build to secure the nation's energy sovereignty.
The ambition of Erginbilgic, who took over at the Derby-based group in 2023, would need to see Rolls-Royce nearly double its market capitalisation to overtake AstraZeneca, the pharmaceuticals group worth just shy of £172 billion. Rolls-Royce's market capitalisation is £92 billion.
If it is to claim the scalp, Rolls-Royce would need to pass several other colossi of the UK corporate scene on the way: HSBC, Europe's biggest bank, is valued on the stock market at £163 billion, oil and gas major Shell has a value of £155 billion and Unilever, the consumer goods group, is at £110 billion. British American Tobacco currently remains marginally ahead of Rolls-Royce at £93 billion.
Erginbilgic said Rolls-Royce has the 'potential' to become top dog because of its pivot into civil nuclear, using its technology developed for Britain's nuclear submarine fleet to build out local power stations with small modular reactors (SMRs). It has already signed deals with the UK and Czech governments.
'There is no private company in the world with the nuclear capability we have,' Erginbilgic told the BBC. 'If we are not market leader globally, we did something wrong.'
He said Rolls-Royce is chasing a $1 trillion-plus market in SMRs which he reckons will see 400 of them installed worldwide by 2050 at a current cost of £2.2 billion apiece.
The Rolls-Royce boss said the need for SMR installations is becoming particularly acute because of the need to power the data centres that will facilitate mass adoption of artificial intelligence.
Rolls-Royce shares have already risen tenfold since Erginbilgic took over in January 2023 with the stock rising from 93p to the current £10.82.
The chief executive famously called the company a 'burning platform' when he arrived and set about turbocharging the reforms of the company begun under his predecessor Warren East, who had weathered the Covid-19 crisis. Other storms have swept the business, including record fines for bribery and corruption across five continents; and billions of pounds to repair design and durability issues with the Trent 1000 engines for the Boeing 787 Dreamliner.
Erginbilgic swept out much of the previous management and set about creating a regime in which the company would refuse to accept second best on pricing power for its engines for Boeing, Airbus and business jets, or on manufacturing efficiency.
Since he took over Erginbilgic has seen Rolls-Royce overtake in market capitalisation terms the likes of his old oil and gas employer BP, fellow defence company BAE Systems, Barclays bank and Rio Tinto the miner.
