14th Jun 2018 08:02
LONDON (Alliance News) - Rolls-Royce Holdings PLC on Thursday said it will cut around 4,600 jobs, predominantly in the UK and mainly corporate and support roles, as part on a new business restructuring plan to save GBP400 million per annum by end of 2020.
Shares in the company opened 2.6% higher at 861.00 pence each, the best performer in the FTSE 100.
"Around a third of these roles are expected to leave by the end of 2018. The programme is expected to gain further momentum through 2019, with full implementation of headcount reductions and structural changes by mid-2020," the company said.
The jet engine maker, which in January announced a plan separate the business into three different units, expects the new restructuring programme to deliver improved returns, higher margins and increased cash flow.
Under the restructuring programme, the company aims to remove corporate management layers, complexity and duplication, including within its core engineering division, and replace a centralised decision and control structure by empowered business units having clearer accountabilities, and decision-making powers.
The total cash cost of the restructuring programme is expected to be around GBP500 million, which will be incurred across 2018, 2019 and 2020.
"We have made progress in improving our day-to-day operations and strengthening our leadership, and are now turning to reduce the complexity that often slows us down and leads to duplication of effort. These changes will help us deliver over the mid and longer-term a level of free cash flow well beyond our near-term ambition of around GBO1 billion by around 2020," Chief Executive Warren East said.
The London-headquartered company does not expect the new restructuring programme to affect its current projects including ramp-up in civil aerospace engine production and solving in-service issues with the Trent 1000 engines.
The FTSE100 listed engineering company also said that current trading remains in-line with full year expectations set out in March. The company also has retained its 2018 free cash flow guidance of around GBP450m, up, or down GBP100 million
Rolls-Royce is holding its Capital Markets Event on Friday at which it will provide further details on its restructuring progamme, including details on its key performance indicators, capital allocation strategy and a review of power systems business and its outlook.
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