Rolls-Royce cuts senior manager jobs in savings drive
LONDON – British engineering company Rolls-Royce is cutting a few dozen senior management jobs, the latest move by its chief executive to revive a company reeling from low oil prices and a slowdown in aero-engine servicing.
CEO Warren East, who took the helm in July, wants to cut the company’s cost base by 150-200 million pounds a year by 2017.
Fewer than 50 senior managers at Rolls-Royce, or roughly a quarter of managers at that level, will leave over the coming months, according to the Financial Times newspaper.
“The restructuring of our senior management … will result in a small number of people leaving the business,” a spokesman for Rolls-Royce said on Thursday evening.
Most of the job cuts will affect managers reporting directly to East or one of the business presidents of its civil aero-engines, defense, nuclear, marine, and power systems units.
East is under pressure to reverse the fortunes of the jet-engine maker after four profit warnings in just over a year, and after U.S. activist investor ValueAct amassed a 10 percent stake in the company and pressed for a board seat.
ValueAct has been pushing Rolls-Royce to focus on its main aero-engine business, which contributes about half the firm’s profits.
Founded in 1884, Rolls-Royce the aero-engine maker was separated from the luxury car brand of the same name in the 1970s, establishing itself as one of Britain’s most prominent engineering companies.
The company increased profit every year in the decade to 2013 but has since repeatedly slashed forecasts, culminating in a warning in November that could cut its dividend, and East has said he cannot rule out another profit-warning.
Analysts have identified further risks to Rolls-Royce in the last month, noting firms that compete with its power systems unit have made downbeat comments, and recent economic slowdowns have raised concerns about aircraft overcapacity.
Rolls-Royce’s stock has plunged almost 40 percent over the last twelve months and is down 6 percent in the year to date. The shares were up 1.2 percent at 548.5 pence in early Friday trading.
The latest job cuts follow the first stage of Rolls-Royce’s management shake-up in mid-December, when East scrapped a two-divisional structure in favor of five business unit heads reporting directly to him. -Reuters