Rolls-Royce Cuts Further 800 Jobs in Marine Business -- Update
December 01 2016 - 7:10AM
Dow Jones News
(Updates with CEO comments and context on the cost cuts and
marine business.)
By Robert Wall and Razak Musah Baba
LONDON--Rolls-Royce Holdings PLC (RYCEY) will reduce its marine
division's workforce by a further 800 as part of a plan to reduces
losses at the unit.
The British aircraft-engine maker said Thursday that this
reflected the continuing weakness in the maritime market. The
proposed reductions are in addition to the unit's 1,000 job cuts
announced in May and October last year. The marine business
currently employs around 4,800 people in 34 countries.
The company said its simplification of the business, senior
management review and cost-reduction initiatives would save an
estimated 45 million to 50 million pounds ($56 million to $62
million) on an annualized basis from mid-2017. The restructuring
will cost GBP20 million upfront, split between this year and
next.
"The actions being taken will enhance the competitive strength
and resilience of the business in what remains an attractive market
for Rolls-Royce," Chief Executive Warren East said.
Rolls-Royce shares at 1120 GMT traded flat at 6.77 pence, paring
earlier gains and valuing the company at GBP12.44 billion.
Thursday's proposals follow a series of initiatives over the
past three years to improve the competitiveness of the marine
business, which Rolls-Royce has faced calls to divest.
Mr. East, who joined in 2015, has accelerated job cuts and hopes
to generate up to GBP200 million ($250 million) in annual savings
from late 2017.
He said in November that Rolls-Royce, which is no longer
affiliated with the luxury car maker, would launch a review that
could lead it to pare some businesses. He also said the company
would invest in a new research and development center and service
facility in Ulsteinvik, Norway.
The prolonged slump in oil and gas prices has weighed on demand
for the Rolls-Royce-powered ships used in exploration and serving
of rigs. The company, best known for the aircraft engines powering
Airbus Group SE and Boeing Co. jetliners, has issued a series of
profit warnings.
Write to Robert Wall at robert.wall@wsj.com and Razak Musah Baba
at razak.baba@wsj.com
(END) Dow Jones Newswires
December 01, 2016 06:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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