20th May 2020 08:28
(Alliance News) - Rolls-Royce Holdings PLC on Wednesday announced a major business reorganisation that will see it cut at least 9,000 jobs from its global workforce.
The FTSE 100-listed jet engine maker said the restructuring is expected to produce more than GBP1.3 billion of annualised savings, about GBP700 million of which will come from the headcount reduction.
The reorganisation is expected to result in around GP800 million of one-off cash costs, with outflows to be incurred across 2020 to 2022.
Most hit by the reorganisation will be the Civil Aerospace business, which has suffered a sharp drop in customer demand for both civil aerospace engines and aftermarket services in the wake of the Covid-19 pandemic.
The company plans to conduct a "detailed review" of its "facility footprint" within Civil Aerospace, though the restructure will also hit its central support functions.
Rolls-Royce said its Power Systems business, as well as ITP Aero, are in the process of "developing, negotiating and executing extensive measures to deal with the current situation".
The UK- and US-based Defence business, "robust during the pandemic", will not see a headcount cut, and its outlook remains unchanged.
"As part of the reorganisation, we will ensure that our internal Civil Aerospace supply chain continues to support our defence programmes and explore any opportunities to move people into our Defence business," Rolls-Royce.
The firms will consult with employee and trade union representatives, so is not providing details on specific sites or countries at present. Rolls-Royce had announced a restructuring back in June 2018, and that effort will "transition into this wider reorganisation" going forward.
Chief Executive Warren East said: "Governments across the world are doing what they can to assist businesses in the short-term, but we must respond to market conditions for the medium-term until the world of aviation is flying again at scale, and governments cannot replace sustainable customer demand that is simply not there."
East added: "The strategic choices that we have made over the last few years have helped us to respond rapidly to Covid-19 and the synergies between our divisions leave us well placed to capitalise on the long-term potential of our markets. The world on the other side of this pandemic will need the power that we generate to fuel economic recovery. I absolutely believe the call for that power to be more sustainable will be stronger than ever. This plays to our strengths. We must ensure that we are able to continue to innovate and play our leading role in enabling the vital sectors in which we operate achieve net zero carbon emissions."
Rolls-Royce shares were down 3.1% at 259.30 pence early Wednesday in London.
By Anna Farley; [email protected]
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