Aerospace engines maker Rolls-Royce is set to “streamline” its senior management next year as it again downgraded its profits forecast for 2016.
Shares plummeted more than 20 per cent this morning as the firm revealed that 2015 profits would be at the lower end of its guidance range of £1.325 billion to £1.475bn.
As a result of significantly weaker demand, chief executive Warren East said the firm faced profit “headwinds” of around £650 million next year, up from the £300m cut to profits outlined in July.
“While 2015 remains broadly as expected, the outlook for 2016 is very challenging,” he said.
“The speed and magnitude of change in some of our markets, which have historically performed well, has been significant and shows how sensitive parts of our business are to market conditions in the short term.”
In response, the company will launch a restructuring programme for next year, which it hopes will save it around £150m to £200m a year.
The programme will see the engine-maker “simplify the organisation model, streamline senior management and add greater pace and accountability to decision-making”.
The firm currently has about 2,000 staff who would fall into the senior management category. It is not yet clear how many jobs might be cut, but they will not be limited to its UK operations.
East added: “The next few years are going to be important in laying the foundations for our long-term profitable growth.
“Therefore it is important to ensure we are financially stronger, more resilient to short-term shocks and more flexible to take advantage of growth opportunities.”