Aerospace engines maker Rolls-Royce today said it was seeking annual cost savings of up to £200 million through a “major restructuring”.
The group, which earlier this month downgraded its profits forecast for 2016, said the “painful” overhaul would include cuts among senior management and efforts to reduce its fixed costs.
Rolls, which employs more than 54,000 people in 50 countries, hopes to save between £150m and £200m a year through the shake-up, with the benefits expected to start materialising from 2017 onwards.
Chief executive Warren East said: “As a group we are undergoing an unprecedented period of change. Change in our mix of business and how we account for it. Change in our industrial footprint as we invest in a wide-ranging transformation. And change in demand for our products as we double our large engine output and manage reductions in demand in other markets. These changes, while more painful than we expected in the near-term, are vital to our long-term success.
“My review has underpinned my confidence about the opportunities before us and I am convinced that our long-term outlook is positive. It has also highlighted a number of areas where we can simplify the way we work, inject pace into our decision-making and responsiveness, and improve our operational gearing and operational effectiveness. This is fundamental to ensuring Rolls-Royce best positions itself to compete for the long term opportunities before us.”
Chairman Ian Davis added: “As a board we are committed to providing Warren with the support he needs to implement the findings of his review. He is recommending clear and decisive actions which we fully support and we are committed to ensuring he has the right resources at the highest level to deliver these changes.”