This Business Breakdowns podcast interviews Graeme Forster of Orbis Investments about Rolls-Royce Holdings, focusing on its aerospace engine business. The discussion covers the company's history, its duopoly with GE in large aircraft engines, the unique long-term service agreements with airlines (similar to insurance), and the challenges and opportunities in maximizing profitability and market share. Forster highlights the importance of "time on wing" for engine profitability and the potential of Rolls-Royce's entry into the small modular reactor market. The interview concludes with a discussion of management's operational improvements and capital allocation strategy, emphasizing the long-term turnaround potential. A key takeaway is the significant role of aftermarket service agreements in Rolls-Royce's profitability and the potential for substantial growth in the nuclear energy sector.
