Rolls-Royce is planning a major restructuring
Technical group Rolls-Royce said it will report the details of “large-scale restructuring” business later.
Executive Director Uorren Ist, who took the reins in July, said the changes “will simplify the organization, streamline senior management, reduce fixed costs” and accelerate the decision-making process. East said it plans to reduce annual costs by 150-200 million pounds.
Earlier this month, the company announced the fifth prevention of decline in profits in less than two years.
East said: “We are exposed to an unprecedented period of change … these changes in the short term will be more painful than we expected, but it is vital for our long term success.”
He added that the review of the “reinforced his confidence” about the development of business opportunities.
“Restructuring – this is the only way to ensure that Rolls-Royce good positions, and get the opportunity to compete for the long-term prospects”, – he said.
Earlier this month the technical team stated that the changes would entail the dismissal of 2000 employees managers. It was previously announced cuts, which will affect 3600 employees.
Chairman Rolls-Royce Yen Devis said that if East wants to enlist the support of the board, it should implement the ideas presented in his review.
The company has suffered greatly due to the slowdown in its core business for the production of aircraft engines. Earlier this month the company reported that while new engines demand for large passenger aircraft remains unchanged, many airlines blamed their older aircraft in favor of modern fuel-efficient models.
As a result, profit from the delivery of spare parts and maintenance has decreased significantly. In addition, sales of engines for corporate aircraft also dropped sharply.
Meanwhile, lower oil prices have brought major loss of business for the production of marine engines Rolls-Royce is mainly due to falling demand from the offshore energy companies.
The need for restructuring was supported by the US active investor ValueAct, which acquired a stake in Rolls-Royce, shortly after the appointment of Ista. Recently, the company has doubled its share to 10%, becoming the largest investor in Rolls-Royce. ValueAct insists on selling a business for the production of marine engines, in order to focus on its core business – the production of aircraft engines. The company also requested a place on the board of directors of Rolls-Royce, but was refused.
Rolls-Royce shares fell 15%. Investment analyst Hargreaves Lansdown Plc Kit Boumen said that the proposed restructuring “would be more painful and rather than assumed control.”
“Reducing the cost and inefficiency of a short-term focus. However, the restructuring measures do not involve drastic changes. “
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