Rolls-Royce (RR) has announced the next stage in its restructuring programme that is to deliver improved returns, higher margins and increased cash flow, but will cost around 4600 jobs, predominantly in the UK.
In January, the company revealed its plans to simplify the Group into three business units in order to create smaller and more cost effective corporate and support functions and reduce management layers and complexity, including within engineering.
Headcount Reductions
Over the next 24 months, around 4600 positions will be cut, predominantly in the UK where the majority of RR's corporate and support functions are based. 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.
'Changing How We Work'
Chief Executive Warren East said: '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. It is never an easy decision to reduce our workforce, but we must create a commercial organisation that is as world-leading as our technologies. To do this we are fundamentally changing how we work.'
Net Cost Savings
The total cash cost of the restructuring is expected to be £ 500 m, which includes the cost of redundancies and required systems investments to facilitate the programme. These cash costs will be incurred across 2018, 2019 and 2020 and, given the one-off nature of the restructuring programme, these will be reported below group underlying free cash flow (FCF). Full year net cost savings from this restructuring are expected to reach a run rate of £ 400 m per annum by the end of 2020.
Picture: RR has become an industry leader in the fields of ship intelligence and autonomous vessels (by RR).
